Fitch Ratings has placed the residential servicer ratings for Residential Capital (ResCap) on rating watch negative.
The Rating Watch Negative indicates that the rating agency might either downgrade or affirm ResCaps servicer ratings depending on the stability of the firm's servicing portfolio, operational capabilities, as well as financial condition.
The rating agency downgraded ResCaps issuer default rating (IDR) to 'C' from 'BB-'
on May 2 after Rescap announced its debt exchange offer.
Meanwhile,ResCaps corporate ratings remain on Rating Watch Negative pending execution of the debt exchange offer.
According to Fitch, the servicer rating actions reflect the continued pressure on ResCap's liquidity position and financial flexibility. Fitch also considered the potential effect on the companys servicing operations.