S&P Cuts Ratings of Prime-Jumbo Mortgage Bonds

Submitted by
CalculatedRisk on Thu, 05/22/2008 - 12:48pm (23 comments)
in
Mayor McFirst wrote on Thu, 5/22/2008 - 1:09 pm

ZIP IT UP AND ZIP IT DOWN!

11th Anonymous this week wrote on Thu, 5/22/2008 - 1:10 pm

I'm sure HaloScan is just acting up. I bet this post is already past the 9th one.

Hmmm...

4shzl wrote on Thu, 5/22/2008 - 1:13 pm

As noted earlier, 2008 may be the year of default in many categories:
Corporate Defaults Reach 28, Exceeding Total for 2007 (Update1) - Bloomberg.com

Ministry of Truth wrote on Thu, 5/22/2008 - 1:14 pm

It is all CONTAINED, god damn it!!!

4shzl wrote on Thu, 5/22/2008 - 1:15 pm

Wheee -- did Haloscan just wipe the slate clean?

Terry wrote on Thu, 5/22/2008 - 1:17 pm

This will help pricing for Jumbo (and LFKAJ) come closer to that for conforming loan amounts.

Guess what? Jumbo loans have more inherent risk, and should be priced accordingly.

This really isn't rocket surgery....

Clyde wrote on Thu, 5/22/2008 - 1:18 pm

Some analysts are more worried about prime mortgage-backed securities than subprime because it was not uncommon a couple of years ago to only have a 3% credit enhancement on a pool of prime mortgages to make them "AAA". Subprime deals had 3-4 times that amount of protection because history had shown that they were dodgy. Once the credit enhancement is gone, it rarely builds back (through excess spread). So credit market prime exposure is probably higher than most think.

AllenM wrote on Thu, 5/22/2008 - 1:18 pm

Nice cuts of prime rib!!

On Special!

One can say nothing more than, AAA- oh really?

I wonder if the Fed has any of this in the TAF?

It's not yet Friday? Starting a mite bit early are we?

Ten new lows on the ABX: http://www.markit.com/information/products/category/indices/abx.html

All is well, right?

Someday this war's gonna end...

barely wrote on Thu, 5/22/2008 - 1:21 pm

MORE REASONS TO BE BULLISH!

AllenM wrote on Thu, 5/22/2008 - 1:21 pm

As for Pimco- I wonder if buying all of that mortgage paper was such a good idea:

ABX-HE-BBB 06-2 6 2 133 0A08AIAB6 Now: 6.70 High: 100.59 Low: 6.70

Kinda like a 94% loss from the high there.

This stuff should not have been rated, period. Buckle up, this summer is going to be absolutely miserable here in the good ol' USA

Someday this war's gonna end...

Lawyerliz wrote on Thu, 5/22/2008 - 1:23 pm

Well, I guess my mtg defense biz will prosper, since nothing else is.

Hard equity lenders in Miami-Dade County are taking peak pricing, deviding by half to get current value, and then loaning only 65% of that. But then, it's their money. So, I assume the value in Miami has dropped by 50-60%. The condo towers--who knows. More than 60% at least.

MarkS wrote on Thu, 5/22/2008 - 1:42 pm

ABX-HE-BBB 06-2 6 2 133 0A08AIAB6 Now: 6.70 High: 100.59 Low: 6.70

Sell it to FREddie, he'll buy anything

Anonymous wrote on Thu, 5/22/2008 - 2:02 pm

As has been pointed out before, HaloScan always seems to act up the most during the most unstable economic periods.
Just extra busy, being hacked or assisting the Bush administration? You make the call.

Matt wrote on Thu, 5/22/2008 - 2:12 pm

This is also an indication that ratings agencies are in transition.

Anonymous wrote on Thu, 5/22/2008 - 2:17 pm

waiting for our weekly installment of
B.F.F.: Bank Failure Friday..

was stunned we had none last week.....that got public at least.

Ciao
MS

Anonymous wrote on Thu, 5/22/2008 - 2:19 pm

BTW on local radio there was a segment about repo. men....the person featured was saying how great G. Bush was for him...he ended the interview with a big "hallelujah for G.W."

About crashed my car hearing that...funnier than hell

Ciao
MS

tj & the bear wrote on Thu, 5/22/2008 - 2:26 pm

It was a constant drumbeat of MBS downgrades that heralded the January swoon. Look out below!!!

Bob_in_MA wrote on Thu, 5/22/2008 - 3:24 pm

I wonder what happens if they downgrade a AAA rated bond that an investment bank has deposited with the Fed so they can borrow against it?

un autre Canadien avec popcorn wrote on Thu, 5/22/2008 - 3:40 pm

Bob_in_MA | 05.22.08 - 7:29 pm |

That's a bloody good question. One I have wondered about myself. I think the answer is absolutely nothing.

jg wrote on Thu, 5/22/2008 - 3:42 pm

Hope that you are right, tj. C'mon swoon!

bond guy wrote on Thu, 5/22/2008 - 3:44 pm

"Bob_in_MA writes:
I wonder what happens if they downgrade a AAA rated bond that an investment bank has deposited with the Fed so they can borrow against it?"

Under a standard collateralization agreement, it would to be replaced with eligible collateral whenever the maintenance period is hit (weekly or daily are standard). I don't know how these new programs work exactly, but no report I read indicated to me that the collateral agreements were anything other than standard.

Billy Shears wrote on Thu, 5/22/2008 - 7:29 pm

This really isn't rocket surgery....
Terry | 05.22.08 - 5:22 pm | #

LOL! That's a good one. One of my favorites is, "the mother of all perfect storms."

tj & the bear wrote on Thu, 5/22/2008 - 8:14 pm

what happens if they downgrade a AAA rated bond that an investment bank has deposited with the Fed

Paper that is either downgraded or even put on watch for possible downgrade is "put back" immediately per Fed rules.

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