Being Sanguine on Exsanguination
To be filed under Fed speak, mis- & dis-information or no sub prime bleed into finance or banking...
Philly Fed Head, Chuck Plosser keeping in line with Fed speak:
"The consequences of the declines in housing activity and prices, in my view, have so far not derailed the prospect that economic growth will return toward trend at the end of 2007 and in 2008.
It seems unlikely that we will see significant spillover effects on aggregate consumption from the housing sector.
The paper losses that many homeowners have experienced on their home equity are likely to have only a modest effect on their consumption patterns.
The financial system is healthy and well diversified. So far the financial system has not shown significant strains.
Ol' Chucko may be sanguine on housings effects, but in the real world, the sub prime based debt market exsanguination continues...
Moody's downgraded 399 (RMBS) residential mortgage backed securities because of higher than expected delinquencies on the underlying home loans.
Moody's also said it put 32 other RMBS's under review for possible downgrades for the same reason.
The $5.2 Billion in RMBS effected are all based on ARM & FIXED rate 1st liens.
Moody's also cut the ratings on 2nd lien RMBS, downgrading 52 securities totaling $393 M while keeping 27 of those securities under review for further downgrade.
Moody's also placed an additional 23 securities, approximately $148 M, on review for possible downgrade.
Moody's rationale: "Aggressive underwriting combined with prolonged, slowing home price appreciation has caused significant loan performance deterioration and is the primary factor in the negative rating actions.
Projected pipeline losses have increased over the past few months and are likely to affect the credit support for these certificates."
And thats not all folks, the U.S. subprime mortgage rout is now spreading across debt markets worldwide.
Investors are demanding higher interest margins and tougher safeguards while lenders are shunning riskier assets.
Credit default swaps (CDS) are financial instruments based on bonds or loans that are used to speculate on a company's ability to repay debt.
Leveraged Buy Outs (LBO's) typically borrow the bulk of the buyout capital (loans & bonds) and then use the companys future cash flow to repay the debt.
Today, the iTraxx LevX Index had its largest surge in 3 years as investor & lender confidence plunged to a nine month low.
The iTraxx LevX Index tracks credit default swaps on loans to 35 European companies owned by LBO firms.
A rise in the index reflects lowered investor confidence in the ability of the companies to repay their debts.
Philly Fed Head, Chuck Plosser keeping in line with Fed speak:
"The consequences of the declines in housing activity and prices, in my view, have so far not derailed the prospect that economic growth will return toward trend at the end of 2007 and in 2008.
It seems unlikely that we will see significant spillover effects on aggregate consumption from the housing sector.
The paper losses that many homeowners have experienced on their home equity are likely to have only a modest effect on their consumption patterns.
The financial system is healthy and well diversified. So far the financial system has not shown significant strains.
Ol' Chucko may be sanguine on housings effects, but in the real world, the sub prime based debt market exsanguination continues...
Moody's downgraded 399 (RMBS) residential mortgage backed securities because of higher than expected delinquencies on the underlying home loans.
Moody's also said it put 32 other RMBS's under review for possible downgrades for the same reason.
The $5.2 Billion in RMBS effected are all based on ARM & FIXED rate 1st liens.
Moody's also cut the ratings on 2nd lien RMBS, downgrading 52 securities totaling $393 M while keeping 27 of those securities under review for further downgrade.
Moody's also placed an additional 23 securities, approximately $148 M, on review for possible downgrade.
Moody's rationale: "Aggressive underwriting combined with prolonged, slowing home price appreciation has caused significant loan performance deterioration and is the primary factor in the negative rating actions.
Projected pipeline losses have increased over the past few months and are likely to affect the credit support for these certificates."
And thats not all folks, the U.S. subprime mortgage rout is now spreading across debt markets worldwide.
Investors are demanding higher interest margins and tougher safeguards while lenders are shunning riskier assets.
Credit default swaps (CDS) are financial instruments based on bonds or loans that are used to speculate on a company's ability to repay debt.
Leveraged Buy Outs (LBO's) typically borrow the bulk of the buyout capital (loans & bonds) and then use the companys future cash flow to repay the debt.
Today, the iTraxx LevX Index had its largest surge in 3 years as investor & lender confidence plunged to a nine month low.
The iTraxx LevX Index tracks credit default swaps on loans to 35 European companies owned by LBO firms.
A rise in the index reflects lowered investor confidence in the ability of the companies to repay their debts.
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