Fitch Ratings has downgraded Residential Capital's (ResCap) RMBS servicer ratings. The rating agency said that servicer ratings also remain on Rating Watch Negative by Fitch, so there's a possibility of a further downgrade down the road.
According to the rating agency, the servicer rating downgrades are a result of ResCaps weakening financial condition. Fitch downgraded ResCaps Issuer Default Rating (IDR) to C' from 'BB-' on May 2 after the firm's announced debt exchange offer. ResCaps corporate ratings are still on Rating Watch Negative pending the execution of the debt exchange offer.