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Realogy responds to ‘negative’ outlook

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Realogy Corp.'s chief financial officer has responded to a "negative" outlook issued by Standard & Poor's Ratings Services with a statement about the company's financial footing. The company has also been called out by the Wall Street Journal for using financial instruments known as payment-in-kind (PIK) toggle notes, which the newspaper's "Deal Journal" blog refers to as "a much-maligned financing structure that allows (the company) to pay debt with debt," and Realogy's chief financial officer has said the decision to use the PIK toggle notes is intended to spare the company from dipping into its cash reserves. Standard & Poor's on March 27 affirmed Realogy's corporate rating of "B," but revised its ratings outlook from "stable" to "negative," citing lower earnings expectations, the company's "highly leveraged capital structure," and reduced ability to generate cash flow because of the housing ...