S&P Lowers Delta's Senior Debt Rating

Standard & Poor's has lowered the senior debt and long-term counterparty and credit ratings of Delta Financial Corp. to single-'B'-minus from single-'B'. The short-term counterparty credit rating of the Woodbury, N.Y.-based subprime mortgage lender is affirmed at single-'B'. The outlook remains negative. S&P reported that the ratings actions reflect the company's difficulty in sustaining a positive operating cash flow and establishing sufficient liquidity to meet longer-term obligations. A $150 million senior debt issue rated by S&P matures in 2004. "While Delta Financial has sufficient short-term liquidity to service this debt, its ability to repay or refinance the note at maturity is uncertain, given the company's current performance and the public debt market's lack of receptiveness to subprime specialty mortgage companies. Although these conditions may improve or the company may find private sources for refinancing the debt, either scenario is highly speculative and such uncertainty is not consistent with the single-'B' rating," Standard & Poor's said. On the positive side, S&P noted that the company has a final settlement in place with the New York Office of the Attorney General and the New York State Banking Department and as such has eliminated the uncertainty associated with the regulators' investigations. Standard & Poor's website is http://www.standardandpoors.com/ratings.