S&P: Residential Capital cut, still on watch

Standard & Poor's said it lowered its long-term issuer credit rating on Residential Capital LLC to CC from CCC and its issue-level ratings on Residential Capital's junior subordinated and senior unsecured debt to C from CC.

The agency said it kept the issuer credit rating and issue-level ratings on CreditWatch with negative implications. The C short-term issuer credit rating is also on CreditWatch negative.

"The downgrade reflects our view that ResCap may not have sufficient liquidity to meet the April 13 maturities on two senior credit facilities that its parent, Ally Financial Inc., provides," said S&P credit analyst Brendan Browne in a news release.

"Ally has not said whether it will extend the maturities on those facilities or provide any additional support, meaning ResCap could be forced into bankruptcy at that time. Under our criteria, a company rated CC is highly vulnerable," Browne said.

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