Saturday, January 6, 2007

by Elizabeth Hester

NEW YORK, USA (Bloomberg): Shares of Doral Financial Corp., Puerto Rico's largest mortgage lender, dropped 9.8 percent as two bond services lowered their ratings on the company's senior debt.

The stock fell 24 cents to $2.22 in New York Stock Exchange composite trading after Standard & Poor's Ratings Services cut Doral's rating to B from B+, and said the "outlook remains negative." Moody's Investors Service dropped its rating to B2 from B1, citing Doral's need to repay $625 million in debt due in July, plus legal and regulatory issues and the December 29 resignation of Doral's chairman. Both ratings are considered below investment grade.

Doral, which lost $62.5 million in the first nine months of 2006, said last week it will need "significant outside financing" to pay off the debt. UBS AG analyst Omotayo Okusanya wrote in a research note this week that the company may face bankruptcy.

Moody's said the rating may be cut again because of Doral's "lack of progress in raising the needed capital." The resignation of Chairman John Ward as well as the "tenor of his disclosed resignation note" had "heightened Moody's concern about Doral's governance," the ratings firm said. Ward's departure was made public in a January 3 regulatory filing.

Shares of Doral have dropped 80 percent in the past year.

  Most popular articles: viewed, printed and e-mailed

  Printable version