Moody's reviews rating of H&R Block unit |
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Tue, 13 Nov 2007 13:23
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NEW YORK (AP) - Credit rating agency Moody's Investors Service said Tuesday it has placed on review for a potential downgrade the senior debt and short-term ratings of Block Financial Corp., an operating subsidiary of H&R Block Inc.Moody's is reviewing the company because of the continued poor performance of H&R Block's subprime mortgage division, Option One Mortgage Corp. Subprime mortgages -- loans given to customers with poor credit history -- have gone increasingly into default in recent months, leading to a steep reduction in the size of the market.H&R Block is currently in the middle of selling Option One to Cerberus Capital Management, and a downgrade could occur if the deal is completed at a lower price than anticipated or if the deal falls apart all together, Moody's said in a statement.Moody's will also look at H&R Block's capital structure as part of the review.Block Financial currently carries a 'Baa1' rating for its senior unsecured debt. 'Baa1' is considered an investment-grade rating. Even if Moody's lowers the rating, it said a multi-notch downgrade is unlikely, meaning ratings are unlikely to fall into non-investment grade or 'junk' status.Lower ratings make it more difficult and more expensive for companies to borrow money.Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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H&R Block unit ratings placed on review for downgrade - Moody's 