Aug. 14 (Bloomberg) -- 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.

The company's shares fell 34 cents to A$1.41 in Sydney. The stock has slumped 43 percent since it was sold to the public at A$2.50 and began trading on July 27.

`Unprecedented Disruptions'

``The U.S. has experienced unprecedented disruptions in recent weeks, which has resulted in material increases in spreads and shortages in liquidity,'' Rams said in the statement.

The cost of U.S. short-term commercial loans has risen about 20 basis points to 32 basis points above the 30-day bank bill swap rate, said Rams, which has A$14.2 billion ($11.9 billion) of loans.

The lender included a debt-market crisis among a list of potential risks in a June 27 document for prospective investors ahead of its A$695 million share sale. UBS AG managed and underwrote the offering, when Rams forecast a 35 percent gain in 2008 net income to A$58.6 million.

BNP Paribas SA, France's biggest bank, last week halted withdrawals from three investment funds because it couldn't ``fairly'' value their holdings after U.S. subprime mortgage losses roiled credit markets. Bear Stearns Cos. and Union Investment Management GmbH have also stopped fund redemptions.

Sydney-based hedge funds Absolute Capital Group Ltd. and Basis Capital Fund Management Ltd. have also been caught in the rout and are trying to avoid selling assets at distressed prices.

Mortgage Insurance

Rams, which has 80 branches in New South Wales, Victoria, Queensland and Western Australia states, said it had no investments in U.S. subprime loans, the source of the spreading turmoil in credit markets. All the company's loans have 100 percent mortgage insurance, it said.

Analysts at Credit Suisse yesterday cut their profit estimate for Rams by between 10 percent and 15 percent, citing the problems in debt markets. Still, the broker raised its rating for the stock to ``outperform'' from ``neutral'' following a decline in the shares.

``We estimate the current conditions could trigger a refinancing of Rams' extendible commercial paper structure to more expensive, longer-term funding,'' Alex Chau, a Sydney-based analyst at Credit Suisse, said in the report. ``As U.S. spreads have increased significantly, Australian markets have not been immune. A 1 percent reduction in net interest margins reduces earnings by around 1 percent.''

To contact the reporter for this story: Stuart Kelly in Sydney skelly22@bloomberg.net

Last Updated: August 14, 2007 04:16 EDT