Moody's lowers DriveTime

Moody's Investors Service said it downgraded the senior unsecured debt rating of DriveTime Automotive Group and DriveTime Acceptance Corp. to Caa2 from Caa1.

The outlook is negative. The action concludes the review begun on Nov. 13.

The downgrade reflects increased concern regarding the company's operating profile in the face of an economic downturn substantially more severe than anticipated, according to the agency.

The combination of higher trending credit losses and higher funding costs is likely to significantly compress the firm's operating margins, Moody's said.

The action also reflects concerns regarding the viability and sustainability of DriveTime's funding model, the agency said.

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