Moody's downgraded Walter Investment Management Corp.'s senior corporate family rating to Caa3 from Caa2.
The rating agency also cut the company's senior unsecured rating to Ca from Caa3 and its senior secured bank credit facility rating to Caa2 from Caa1.
Moody's assigned a negative outlook to these ratings.
The downgrades come after the company entered into a restructuring support agreement with senior lenders holding more than 50% of loans and commitments outstanding from a 2013 credit agreement. The agreement will expose creditors to increased loss chance and potential loss severity, Moody's said. Uncertainty surrounding the agreement also inhibits the company's franchise and prospects of reaching sustained profitability.
Moody's said the Caa2 senior secured rating represents an expected loss of 10% to 20%, and that the Ca unsecured note rating represents a possible loss of 35% to 65%.
The negative outlook reflects uncertainty surrounding the restructuring proposal and the increased risk of a bankruptcy filing, the rating agency said. The ratings are unlikely to see an upgrade because of the negative outlook, which could return to stable if the company completes the restructuring on terms similar to those set Aug. 1, Moody's said.
If the restructuring leads to higher expected losses for the senior secured and unsecured lenders, the ratings could face another downgrade, the agency noted.