Fitch Downgrades SPFC Senior Notes

Senior unsecured notes of Southern Pacific Funding Corp., Lake Oswego, Ore., have been downgraded by Fitch IBCA Inc. The rating on $100 million of 11.5% senior unsecured notes due 2004 was lowered from B-plus to B-minus, the rating agency said.The action followed SPFC's announcement that it will take a one-time charge of $60-70 million in the third quarter as a result of changes in the valuation of its residual assets, increased credit loss expectations, and current conditions in the asset-backed, debt, and equity markets. "The rating action reflects SPFC's constrained liquidity over the long term, the ability to execute a committed whole loan sale strategy to improve cash flow, and an overall decline in capitalization, which will be exacerbated by the expected revaluation of the company's interest-only strip for the quarter ended Sept. 30, 1998," Fitch IBCA said. As previously reported, Standard and Poor's has lowered SPFC's long-term and short-term counterparty credit ratings and its senior unsecured debt rating. Fitch IBCA's website address is http://www.fitchibca.com.