S&P Revises Delta Outlook to Negative

Standard & Poor's has revised its outlook on Delta Financial Corp. to negative from stable, while affirming the company's senior debt and long- and short-term counterparty ratings.The actions followed the subprime lender's announcement of a $4.9 million net loss for the second quarter due to a change in prepayment assumptions for earlier securitizations. S&P said it believes Delta's current rating "adequately incorporates prepayment risks, which are felt to be the company's primary vulnerability." Delta's "key strength continues to be its underwriting ability that should provide better protection relative to other subprime lenders in a recessionary environment," S&P said. However, the outlook revision reflects the rating agency's concern that liquidity pressures "could increase over time, especially if capital and debt market sentiment remains negative against the company and the sector for an extended time period." S&P's website address is http://www.ratings.standardpoor.com.