Fitch drops ResCap to CCC

Fitch Ratings said it downgraded Residential Capital, LLC's long-term issuer default rating to CCC from B, short-term issuer default rating to C from B and senior unsecured debt to C/RR6 from CCC/RR6, and affirmed the short-term debt at C.

The downgrade reflects deterioration in year-to-date operating performance at ResCap, magnified by a $442 million net loss reported in its third fiscal quarter as well as significant reduction in the tangible net worth covenant cushion and uncertainty regarding future financial support from its parent Ally Financial Inc. (BB/stable), according to the agency.

ResCap is a wholly owned subsidiary of GMAC Mortgage Group, LLC, which is a wholly owned subsidiary of Ally.

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