Cendant and PHH Ratings Affirmed After Agreement; Outlook Revised to Negative from Developing

NEW YORK (Standard&Poor's CreditWire) Dec. 7, 1999--Standard&Poor's today affirmed its ratings for Cendant Corp and its wholly owned subsidiary, PHH Corp., following the company's agreement to settle the common shareholder litigation arising from accounting irregularities discovered at its CUC International division in April 1998. The outlook was revised to negative from developing. The PHH ratings recognize the firewall between itself and its parent, and enable Standard&Poor's to permit a two notch differential between the issuer credit ratings for PHH and Cendant. Covenants limit intercompany borrowings and dividends to a total of 40% of PHH's net income for the prior 12 months, and management has stated a maximum leverage target of 4 to 1 since

...NEW YORK (Standard & Poor's CreditWire) Dec. 7, 1999--Standard & Poor's today affirmed its ratings for Cendant Corp and its wholly owned subsidiary, PHH Corp., following the company's agreement to settle the common shareholder litigation arising from accounting irregularities discovered at its CUC International division in April 1998. The outlook was revised to negative from developing. The PHH ratings recognize the firewall between itself and its parent, and enable Standard & Poor's to permit a two notch differential between the issuer credit ratings for PHH and Cendant. Covenants limit intercompany borrowings and dividends to a total of 40% of PHH's net income for the prior 12 months, and management has stated a maximum leverage target of 4 to 1 since the sale of the company's fleet business. The $2.8 billion settlement will result in an approximate $1.8 billion after-tax charge in the current quarter. The charge will be a non-cash item initially, and a liability will be recorded on the...

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