Moody's cuts Capmark to junk

Moody's Investors Service said it downgraded the senior unsecured ratings of Capmark Financial Group Inc. to Ba2 from Baa3, and placed the ratings under review for further downgrade.

The action was prompted by Capmark's announcement that it expects to report an estimated pre-tax loss of $800 million for the fourth quarter of 2008, according to the agency.

As a result, Capmark's leverage should rise materially as their expected loss represents about one-third of their third quarter of 2008 book equity, the agency said.

The company also announced that it is possible that the net loss could be higher which would cause their leverage ratio, as defined under its senior credit facility, to exceed its maximum level. Capmark is currently seeking modifications of its senior credit facility, which includes the bridge loan maturing March 23, 2009.

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