Tuesday, July 10, 2007

S&P finally says subprime is mostly junk

Finally after even the blind people have seen the obvious....... To understand how late the rating agencies are read S&P, Moody´s, Fitch... Dumb, Blind, Incompetent...Or Just A Conflict Of Interest ? or ask Bear Stearns .....

The amount of $ 12 billion represents only a low single digit percentage of the total (chart).....

When they will continue with their "downgrading" pace we will hear news like this almost on a weekly basis for quarters to come... :-)


Endlich! Nachdem das Offensichtliche selbst für Laien ( z.B. einem nicht studierten Blogger aus Husum) seit Monaten erkennbar war..... Mehr dazu unter dem o..g. Link.

Die jetzt benannten 12 mrd $ stehen allerdings wieder nur für einen kleinen einstelligen Pozentsatz der zur Disposition stehenden Verbriefungen (Chart).......

Sollten Sie dieses Tempo weiter aufrecht erhalten wird uns das noch wöchentlich für etliche Quartale begleiten.... :-)
July 10 (Bloomberg) -- Standard & Poor's may cut credit ratings on $12 billion of bonds backed by subprime mortgages, citing expectations that losses will continue.

The bonds are from 612 classes of residential mortgage- backed securities, S&P said today in an e-mailed statement. Ratings on collateralized debt obligations that contain the mortgage bonds are also under review, S&P said.

via Marketwatch ( click headline)

New methodology is death knell for the troubled industry

Standard & Poor's just drove a huge harpoon into the heart of the mortgage credit bubble and it's going to take a long time to clean up the mess once the beast finally dies.

S&P, one of the three main credit-rating agencies that served as enablers of the subprime mortgage boom, announced Tuesday that it would lower its ratings on 612 bonds, a small portion of the mortgage-backed securities it had given its seal of approval to.

But the bigger news is that S&P isn't going along with the charade any more. S&P said it would change its methodology for ratings on not only hundreds of billions of dollars in residential mortgage-backed securities, but also on hundreds of billions of dollars in the more complex collateralized debt obligations based on those subprime loans.

A lot of debt will be downgraded to junk status. A lot of that debt will have to be sold at fire-sale prices. A lot of pension funds and hedge funds that once thrived on the high returns they could get from investing in subprime junk will now lose a lot of money.
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7 Comments:

Blogger Edgar, AKA Mort said...

Did you happen to catch this?

H.T. to I.O.M.

8:52 AM  
Blogger jmf said...

Moin Edgar,

thanks!

Looks very good :-)

9:00 AM  
Blogger jmf said...


Fitch Downgrades Two Second-Lien ABS

including Alt-A

9:25 AM  
Blogger Edgar, AKA Mort said...

As per the C.R. link you provided. They are going to downgrade those things so slowly it will be humorous to watch.

Doctor: Your wife's condition deteriorated and has now been downgraded to serious.

Husband: My wife has been dead for two years now, you were even at the funeral.

Doctor: Well, I just got the last set of lab reports this morning.

LOL, the ratings agencies have zero credibility, they are finished in the business.

9:57 AM  
Blogger jmf said...

:-)

yup!

It´s a farce!

10:03 AM  
Anonymous Anonymous said...

LOL, the ratings agencies have zero credibility, they are finished in the business.

I would be surprised if the repercussions for the ratings agencies were extraordinarily severe, or worse. What alternative is there?

eh

10:39 AM  
Blogger jmf said...


Moody´s is downgrading


Moody’s Investors Service said late Tuesday that it downgraded 399 residential mortgage-backed securities because of higher-than-expected delinquencies on the underlying home loans. The rating agency also said it put 32 other residential mortgage-backed securities (RMBS) under review for possible downgrades for the same reason. The RMBS were sold in 2006 and are backed mainly by first lien adjustable- and fixed-rate subprime mortgage loans, Moody’s added.

10:55 PM  

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