S&P lowers Realogy to junk

Standard & Poor's said it lowered its corporate credit rating on Realogy Corp. to BB+ from BBB.

In addition, the rating was placed on CreditWatch with negative implications, S&P said.

At the same time, the agency added it affirmed the BBB rating on the residential real estate company's senior unsecured note issues.

S&P said that the company had pro forma consolidated debt outstanding at Sept. 30, including liabilities under management programs and adjusted for operating leases, of about $3.2 billion.

The downgrade and CreditWatch listing reflected Realogy's announcement that it had entered into a definitive agreement to be acquired by Apollo Management LP in a transaction valued at $9 billion, including the assumption or repayment of $1.6 billion of net debt and legacy contingent, as well as other liabilities of $750 million, S&P noted.

While the ratings on Realogy have historically incorporated a relatively aggressive financial policy, this proposed transaction demonstrates an appetite for a higher level of risk, thus the agency's financial policy expectations have changed, warranting a lower corporate credit rating.

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