Contagion Bush Whacks GSE Agency Backed Debt
As reported yesterday... the spread between 30-year agency mortgage bonds and 10-year U.S. Treasuries
widened to more than 200 basis points yesterday, the highest since 1986.
The agency (FNMA, FHLMC) mortgage bond market has about $4.5 trillion of securities. Philip Gisdakis, senior credit strategist at UniCredit SpA:
"There's never just one cockroach. If you see one highly leveraged hedge fund going bust, then there's another on the way.
The credit crisis is spilling over to the next asset class, agency bonds."
Last week, Thornburg Mortgage plummeted more than 80% in after the home lender received a default notice on a $320 million loan.
Last year, Carlyle Capital expanded its mortgage investments last year, selling $300 million of shares.
The fund used loans to buy about $22 billion of AAA rated mortgage debt issued by Fannie Mae and Freddie Mac,
To stay afloat... in August, the Carlyle fund sold $900 million of assets and received a $100 million loan facility from parent Carlyle Group.
To cut debt, Carlyle Capital has sold almost $1 billion of non residential MBS mortgage backed securities and received another $150 million from Carlyle Group.
On Feb 28th, seeking to build liquidity as mortgage defaults in the U.S. rise...
the Carlyle Fund eliminated its dividend and waived an incentive fee when it reported quarterly financial results.
Carlyle said last month its agency mortgage securities from FHLMC & FNMA:
"have the implied guarantee of the U.S. government and are expected to pay at par at maturity."
Today, Carlyle Capital fell 58% in trading, as the publicly traded mortgage bond fund missed four of seven margin calls totaling more than $37 million...
prompting creditors to seek immediate repayment, of loans linked to even the highest rated agency bonds.
Today, the U.S. Treasury denied speculation today that the government will guarantee
mortgage backed bonds issued by Freddie Mac and Fannie Mae, which are the two largest sources of American home financing.
The Nattering One muses... get ready folks, China & Japan hold the bulk of US agency debt...
add in the jumbo markets and just starting our journey to the dark side are we.
Oh and I can't think of a better bunch of well heeled Washington insiders than the Caryle Group for this to happen to.
Wonder what the Bush's are talking about at the dinner table? Hattip to Bloomberg.
widened to more than 200 basis points yesterday, the highest since 1986.
The agency (FNMA, FHLMC) mortgage bond market has about $4.5 trillion of securities. Philip Gisdakis, senior credit strategist at UniCredit SpA:
"There's never just one cockroach. If you see one highly leveraged hedge fund going bust, then there's another on the way.
The credit crisis is spilling over to the next asset class, agency bonds."
Last week, Thornburg Mortgage plummeted more than 80% in after the home lender received a default notice on a $320 million loan.
Last year, Carlyle Capital expanded its mortgage investments last year, selling $300 million of shares.
The fund used loans to buy about $22 billion of AAA rated mortgage debt issued by Fannie Mae and Freddie Mac,
To stay afloat... in August, the Carlyle fund sold $900 million of assets and received a $100 million loan facility from parent Carlyle Group.
To cut debt, Carlyle Capital has sold almost $1 billion of non residential MBS mortgage backed securities and received another $150 million from Carlyle Group.
On Feb 28th, seeking to build liquidity as mortgage defaults in the U.S. rise...
the Carlyle Fund eliminated its dividend and waived an incentive fee when it reported quarterly financial results.
Carlyle said last month its agency mortgage securities from FHLMC & FNMA:
"have the implied guarantee of the U.S. government and are expected to pay at par at maturity."
Today, Carlyle Capital fell 58% in trading, as the publicly traded mortgage bond fund missed four of seven margin calls totaling more than $37 million...
prompting creditors to seek immediate repayment, of loans linked to even the highest rated agency bonds.
Today, the U.S. Treasury denied speculation today that the government will guarantee
mortgage backed bonds issued by Freddie Mac and Fannie Mae, which are the two largest sources of American home financing.
The Nattering One muses... get ready folks, China & Japan hold the bulk of US agency debt...
add in the jumbo markets and just starting our journey to the dark side are we.
Oh and I can't think of a better bunch of well heeled Washington insiders than the Caryle Group for this to happen to.
Wonder what the Bush's are talking about at the dinner table? Hattip to Bloomberg.
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