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Thursday, May 03, 2007

More Subprime Bond Downgrades

by Calculated Risk on 5/03/2007 12:53:00 AM

From the WSJ: Bond Investors' Lament

Over the past two weeks, Moody's Investors Service cut credit ratings on more than 30 bonds that were issued in 2006 and backed by pools of "subprime" mortgages, home loans made to consumers with troubled or sketchy credit histories. ...

More than half the bonds that were downgraded were originally rated "investment grade" but were cut to "junk" status ...

"It's unusual to see downgrades in subprime deals so soon after they were issued," said Jay Guo, a director of asset-backed securities research at Credit Suisse Group. "This is not a normal phenomenon and is a cause of concern."