The new spate of negative headlines surrounding specialty medical equipment leasing concern DVI Inc. spread further to its outstanding ABS last week. Two of three rating agencies downgraded DVI's ABS after the Securities & Exchange Commission deemed its most recent quarterly filing deficient after Deloitte & Touche resigned as auditor (see ASR 6/16/03). Questions of whether the programmatic issuer would soon be in technical default on its unsecured debt obligations, leading to a servicing transfer, prompted both Fitch Ratings and Moody's Investors Service to place all the outstanding ABS each agency had rated on watch for a downgrade. Standard & Poor's, meanwhile, remains confident in the current ratings.
Banc One Capital Markets noted in a structured debt market comment that the SEC had "essentially agreed with Deloitte & Touche, DVI's former auditor, that Deloitte's review of the financial statements was not complete at the time of the filing."