S&P Global Ratings downgraded its issuer credit rating on Walter Investment Management Corp. to D from CCC- after the company announced that it plans to file for a Chapter 11 bankruptcy.
The agency also lowered its issue-level rating on the company's senior secured term loan and senior unsecured debt to D from CCC- and C, respectively. For the senior secured term loan, S&P said creditors could expect a 55% recovery in a hypothetical default scenario after the company emerges from the current bankruptcy proceedings. Creditors holding senior unsecured notes could expect a 0% recovery in such a scenario.
The ratings actions reflect S&P's view that the bankruptcy means a general default.
Walter Investment expects to complete the restructuring process in the first quarter of 2018 and reduce its outstanding corporate debt by roughly $800 million compared with the outstanding balance as of June 30. The agency does not expect subsidiaries Reverse Mortgage Solutions Inc. and Ditech Financial LLC to file for Chapter 11 bankruptcy.
S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.