Fitch: Cendant strategy positive

Fitch Ratings said Cendant announced this morning that it is considering strategic alternatives for its mortgage business, which is a unit within Cendant's PHH Corp. subsidiary.

In Fitch's view, a divestiture of the mortgage business would represent a positive development for Cendant's and PHH's credit profiles by removing an interest rate sensitive business involving complex hedging strategies.

Cendant has not disclosed the specific planned use of proceeds but Fitch said it believes that funds could be used over time for acquisitions in the company's core real estate brokerage, hospitality or travel segments.

Fitch said it does not anticipate that Cendant Mortgage would make a material contribution to Cendant's operating income since the business is entering the down cycle for mortgage companies as interest rates are increasing.

Fitch rates Cendant's senior unsecured debt BBB+, subordinated debt BBB and commercial paper F2. PHH Corp. ratings are BBB+ for its senior debt and F2 for its commercial paper program.

The outlook for both companies is stable.

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