FGIC Downgrade?; Bank Of America Sells Debt; Countrywide Files Loss; The Pain May Only Get Worse
Another Guarantor Downgrade? CreditSights: "We are expecting to see a downgrade of FGIC any day now."
Financial Guaranty Insurance Co., #4 bond insurer, may have its ratings cut by as many as four levels to A+.
B of A raises $12 billion... Bank of America sold $6 billion of perpetual preferred shares at a yield of 8%.
The bank also completed a $6 billion sale of convertible preferred stock with a 7.25% yield.
Countrywide Reporting for Duty...
Of the 87 companies that reported yesterday after the close and this morning, 60% beat expectations, 17% were in-line and 23% missed.
Topping 3M, Dow Chemical, Eli Lilly, FMC, Travelers, posting losses; AirTran; Northwest Air & JetBlue; missed...
Countrywide posted a larger than expected $421.9 million Q4 loss vs Q3 $1.2 billion loss. For 2007, Countrywide lost $704 million, its first loss in 30 years.
Countrywide set aside $907 million for bad loans vs $70.8 million a year earlier, and wrote down $831 million for prime home equity loans.
It also took a $394 million loss as it reclassified $7 billion of jumbo mortgages as loans it holds for investment. Loan volume fell 44% to $69.2 billion.
CEO Angelo Mozilo:
"(Results) were adversely impacted by further credit deterioration across the industry and continued illiquidity in the secondary mortgage markets,"
The pain may only get worse.
Wilbur Ross, the billionaire: "The subprime crisis is "just the tip of the iceberg."
The market for high-yield, high-risk bonds shows that a U.S. recession is a foregone conclusion.
Junk bonds are off to their worst start since 1990, falling 1.8% and triggering $17 billion in losses this month.
Yields relative to Treasuries are rising at the fastest pace in at least 11 years as prices drop.
The market is saying "We're on the verge of a recession and we may see an incredibly rapid escalation in the default rate."
Junk ratings were assigned to 51% of U.S. corporate borrowers.
Speculative-grade borrowers made up the majority of U.S. corporate debtors for the first time last year.
The default rate will soar to more than 8% this year, the highest since Enron Corp.'s collapse.
There are 147 issuers with bonds trading at distressed levels, including
mortgage lender Residential Capital LLC, whose $16.6 billion of debt was cut to below investment grade last year.
At least three high-yield companies have filed for bankruptcy this month. Quebecor World, the #2 publicly traded printer in North America;
Buffets Holdings, #1 U.S. operator of buffet-style restaurants; and homebuilder Tousa Inc. -98% in the past year.
Financial Guaranty Insurance Co., #4 bond insurer, may have its ratings cut by as many as four levels to A+.
B of A raises $12 billion... Bank of America sold $6 billion of perpetual preferred shares at a yield of 8%.
The bank also completed a $6 billion sale of convertible preferred stock with a 7.25% yield.
Countrywide Reporting for Duty...
Of the 87 companies that reported yesterday after the close and this morning, 60% beat expectations, 17% were in-line and 23% missed.
Topping 3M, Dow Chemical, Eli Lilly, FMC, Travelers, posting losses; AirTran; Northwest Air & JetBlue; missed...
Countrywide posted a larger than expected $421.9 million Q4 loss vs Q3 $1.2 billion loss. For 2007, Countrywide lost $704 million, its first loss in 30 years.
Countrywide set aside $907 million for bad loans vs $70.8 million a year earlier, and wrote down $831 million for prime home equity loans.
It also took a $394 million loss as it reclassified $7 billion of jumbo mortgages as loans it holds for investment. Loan volume fell 44% to $69.2 billion.
CEO Angelo Mozilo:
"(Results) were adversely impacted by further credit deterioration across the industry and continued illiquidity in the secondary mortgage markets,"
The pain may only get worse.
Wilbur Ross, the billionaire: "The subprime crisis is "just the tip of the iceberg."
The market for high-yield, high-risk bonds shows that a U.S. recession is a foregone conclusion.
Junk bonds are off to their worst start since 1990, falling 1.8% and triggering $17 billion in losses this month.
Yields relative to Treasuries are rising at the fastest pace in at least 11 years as prices drop.
The market is saying "We're on the verge of a recession and we may see an incredibly rapid escalation in the default rate."
Junk ratings were assigned to 51% of U.S. corporate borrowers.
Speculative-grade borrowers made up the majority of U.S. corporate debtors for the first time last year.
The default rate will soar to more than 8% this year, the highest since Enron Corp.'s collapse.
There are 147 issuers with bonds trading at distressed levels, including
mortgage lender Residential Capital LLC, whose $16.6 billion of debt was cut to below investment grade last year.
At least three high-yield companies have filed for bankruptcy this month. Quebecor World, the #2 publicly traded printer in North America;
Buffets Holdings, #1 U.S. operator of buffet-style restaurants; and homebuilder Tousa Inc. -98% in the past year.
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