S&P downgrades Thornburg

Standard & Poor's said it lowered its long-term counterparty credit rating on Thornburg Mortgage Inc. to B from BB and placed it on CreditWatch negative.

The agency said the downgrade reflects the unsteady state of the secured financing capital markets on which Thornburg relies to fund its mortgage REIT operations. Thornburg's high leverage levels, high balance of unencumbered assets and reliance on short-term funding further restricts the company's access to liquidity.

The CreditWatch placement reflects the potential for further rating actions if Thornburg fails to weather this liquidity crunch, S&P said. If there are continued significant margin calls affecting Thornburg's funding profile and the company is unable to secure additional financing, or if asset quality deteriorates beyond expected levels, the rating could be further lowered.

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