Australia's Rams Home Loans Group Ltd. said the shakeout in global debt markets may cut profit, sparking a 19 percent plunge in the stock that makes it the nation's worst-performing initial public offering this year.
The impact on the company's June profit forecast ``is likely to be material'' because of rising financing costs, Rams said today in a statement. The Sydney-based lender, which went public last month, gets almost half the funds for its mortgages by selling short-term debt in the U.S.
``Companies like Rams are heavily dependent on what's happening in the credit markets, and a major global event like this one is going to hurt,'' said Peter Morgan, who manages more than $3 billion at 452 Capital in Sydney. ``Rams won't be the last Australian company to feel it, and you can multiply it by a hundred overseas.''
The warning from Rams, the first Australian home-loan company to say profit may be hurt by the deepening crisis in credit markets, follows bankruptcy filings in the U.S. by American Home Mortgage Investment Corp. and New Century Financial Corp.