Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of mortgage banker and corporate vehicle fleet manager PHH
So what: Just two days after putting PHH's credit rating on its negative watchlist, Standard & Poor's dropped the BB+ rating to BB- -- two whole steps down. S&P worries that a $423 million debt payment due in March 2013 may be out of reach.
Now what: Among the suggested fixes for PHH's liquidity problems, S&P suggests selling off attractive mortgage service contracts or running a dilutive stock offering. The debt rating was already in junk territory before this downgrade -- it's just even junkier now. My suggestion to mortgage-hungry investors is to look at stronger banking stocks such as four-star CAPS stocks US Bancorp
Interested in more info about PHH? Click here to add it to My Watchlist.