Tuesday, July 21, 2009

No Kidding.... AAA to BBB- And Back To AAA Within One Week

Looks my rare one and only cheer of the rating agencies ( see No Kidding..... S&P Is Acting Responsible & Threatens To Blow Up Fed´s CRE Bailout Stunt Via TALF ) was as feared premature..... You really cannot make this up..... This is definitely a new low ( even for S&P ).... Let´s hope Bloomberg is right that the change is only related to three 2007 CMBS tranches......UPDATE: S&P Commits Professional Suicide With Ratings Round Trip, Underlying CRE Remains Toxic Garbage via Zero Hedge & .July 22nd, 2009S&P upgrades CMBS to AAA week after downgrading to BBB- R. Winkler....

Sieht ganz so aus als mein erster positiver Gefühlsausbruch in Sachen Rating Agenturen ( siehe No Kidding..... S&P Is Acting Responsible & Threatens To Blow Up Fed´s CRE Bailout Stunt Via TALF ) ad absurdum geführt worden ist. Was da gerade abgeht kann man getrost als neues Allzeittief in Scahen Unabhängigkeit & Glaubwürdigkeit von S&P betrachtenbetrachten. Wer da wohl "interveniert" hat....... Bleibt hier zumindest zu hoffen das Bloomberg Recht hat das vorerst nur 3 CMBS aus dem Jahr 2007 die Wiederauferstehung feiern durften.....UPDATE: S&P Commits Professional Suicide With Ratings Round Trip, Underlying CRE Remains Toxic Garbage via Zero Hedge & July 22nd, 2009S&P upgrades CMBS to AAA week after downgrading to BBB- R. Winkler

S&P Reverses Ratings After Downgrades
In a reversal in its evaluation of a clutch of mortgage bonds backed by commercial property, Standard & Poor's on Tuesday raised the ratings on several securities it had downgraded a week ago.
The move came the same day the Obama administration detailed a plan to overhaul regulation of credit-ratings firms by requiring increased disclosure and stronger oversight, and curbing the practice of "ratings shopping."

In the S&P action, among the bonds returned to the top-notch triple-A category from the triple-B minus category are securities that make up the benchmark GG-10 deal.
The ratings firm said it raised the ratings following the implementation of its "recently updated criteria."

S&P spokesman Adam Tempkin said in an email that the firm had received inquiries from market participants on how it applies losses in the AAA category "that prompted us to clarify our approach. In doing so, we are also introducing refinements to the approach."

The upgrade means that these bonds are now eligible for a Federal Reserve program that offers investors cheap loans to buy them.

S&P Restores Top-Ratings to Commercial-Mortgage Bonds

July 21 (Bloomberg) -- Standard & Poor’s backtracked on ratings cuts issued last week and raised the ranking on commercial mortgage-backed debt from three bonds sold in 2007.

The securities, restored to top-ranked status, had been downgraded as recently as last week, making them ineligible for the Federal Reserve’s Term Asset-Backed Securities Loan Facility to jumpstart lending.

S&P lowered the ratings on a class of a commercial mortgage-backed bond offering from AAA to BBB-, the lowest investment-grade ranking, on July 14.

The New York-based rating company reversed the cut today, S&P said in a statement. In a related report, S&P said it adjusted assumptions on the timing of projected losses on the mortgages.

Debt rated below AAA isn’t eligible for the Federal Reserve’s TALF. Investors sought $668.9 million in loans from the Fed to purchase so-called legacy commercial mortgage-backed bonds on July 16, the first monthly deadline to finance the purchase of the securities.

S&P’s CMBS flip-flop FT Alphaville

Let’s be very clear here: one week ago, according to S&P’s “independent judgment, testing and analysis” a clutch of Goldman’s CMBS ransactions were deemed sufficiently troubled to merit deep downgrades.

One week and some “refinements” later, and “class A-2, A-3, and A-AB commercial mortgage pass-through certificates from GS Mortgage Securities Trust 2007-GG10″ are back to triple-A.


CMBS-saga, cause and correlation
FT Alphaville presents the following CMBS-saga timeline:

- May 19 - Fed announces that it will expand the Talf to include certain legacy CMBS.

- May 28 - S&P warns it will likely downgrade tens of billions of AAA-rated CMBS after tweaking its ratings methodology, including CMBS owned by Goldman Sachs, Credit Suisse, JP Morgan and Morgan Stanley, among others.

- May/June - Investors slowly cotton on to the fact that Talf-eligible CMBS needs at least two triple-A ratings.

- June 16 - The initial subscription for Talf loans for new CMBS fails. No one applies.

- Early July - S&P is reportedly “crushed with client calls” about the proposed new ratings.

- July 16 - Investors ask for a paltry $668.9m at the second Talf legacy CMBS offering. (By way of contrast, an estimated $300bn to $500bn of CMBS is scheduled to mature this year).

- July 21 - S&P reverses its decision to tweak its CMBS rating methodology.
We’re not suggesting these events are related, but you have to wonder …

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2 Comments:

Anonymous eh said...

jmf,

These days it's hard to take anything the ratings agencies do seriously.

One for the share buyback hall of fame:

In a BBC interview, Mr Adelson confesses to having taken money out of his children's trust fund to buy up his own shares as they offered "opportunity".

12:55 AM  
Blogger jmf said...

Moin Eh,

SCHADENFREUDE :-)

8:47 AM  

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