Thursday, December 06, 2007

Nearly 20,000 Downgrades — and Counting

clipped from
The tsunami of subprime-related bond downgrades this quarter sent shockwaves throughout the financial markets. Now that the tide has weakened, analysts are surveying the wreckage.
According to research from Deutsche Bank, credit rating companies Moody’s Investors Service, Standard & Poor’s and Fitch Ratings have issued an unprecedented 19,795 debt downgrades so far this year among securitized assets.
That compares with the 2,539 separate downgrades they issued for all of 2006, and the previous annual record for downgrades, which was 4,168 in 2003.
The percentage of subprime-mortgage-backed debt affected by downgrades is much higher – for example, 58% of collateralized debt obligations backed by subprime collateral that were issued from 2005 to 2007 have been downgraded
“Even more alarming is the degree to which very highly rated securities seem to have deteriorated overnight
some securities issued by collateralized debt obligations had their ratings slashes from triple-A to “distressed”
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