Moody's Downgrades Doral Debt

The senior debt rating of Doral Financial Corp., a San Juan, Puerto Rico-based mortgage lender, has been downgraded from Baa3 to Ba1 by Moody's Investors Service.Doral's subordinated debt was downgraded from Ba1 to Ba2, and the ratings remain on review for further possible downgrade. The actions "reflect concerns about the credit implications of the ongoing delay in filing financial statements, the uncertainty surrounding the board's recent investigation, as well as concerns about corporate governance issues, litigation exposure, and regulatory scrutiny," Moody's said. The rating agency pointed to corporate governance failures at Doral, notably in risk management, accounting practices, and board oversight. "The decision to remove some of the key management members, including the [chief executive officer, chief financial officer], and treasurer, raises some concerns about the extent of internal control failures," Moody's said.