heres an article,the pickings will be great…the buyers will have a field day real soon
July 10, 2007 (LPAC)–UPDATE–After the markets closed today (well down), Moody’s Investors Service announced that it was cutting the credit ratings on $5.2 billion of bonds backed by subprime mortgages. The move by Moody’s affects 399 CDO (collateralized debt obligation) bonds, all of which were issued just last year.
This announcement followed a similar one made this morning by Standard & Poors, that they are set to cut credit ratings on $12 billion worth of bonds, and are considering a much larger re-rating of their portfolio. The move by S&P, made before the market opened, sent markets skidding for the entire day.
The bonds under review by S&P represent a mere 2.1% of the $565.3 billion of similar bonds rated by them during 2006, but is four times the $3 million worth of bonds which they have already subjected to downgrading. In addition, S&P has put the entire class of CDO bonds, representing 612 classes of residential mortgage-backed securities, on a “Credit Watch” with negative implications. S&P, Moody’s, and other “respected” ratings agencies, such as Fitch, have come under fire recently for underestimating the actual risk potential of these bonds, some of which are now selling for fifty cents on the dollar.
Two of the biggest market losers today were Lehman Brothers and Bear Stearns, both “leaders” in underwriting these bonds. CNNMoney is reporting that, in the month of October alone, $50 billion of adjustable rate (sub-prime) mortgages will reset to higher interest rates, resulting in mortgage rate increases of 30-40% for consumers.
These actions “are going to force a lot more people to come to Jesus,” said an analyst. Then he added, ominously, “This could be one of the triggers we’ve been waiting for.”
my 2 cents
Robert A. Doncaster, Jr.
Import/Export Entrepreneur & Investor
*** DO YOUR HOMEWORK ***
Chicago Illinois USA
& sometimes Salzburg, Austria