Tuesday, July 10, 2007

Lowering The Boom

Bloomberg goes four for four today. Number one (07.10.07):
"Moody's Investors Service lowered the credit ratings on $5.2 billion of bonds [ed. - 214 of 'em, from investment grade to junk] backed by subprime mortgages and Standard & Poor's said it may cut $12 billion of securities after criticism they waited too long to respond to rising home-loan defaults."

Moody's Lowers Ratings on Subprime Bonds, S&P May Cut

"Ratings changes 'are going to force a lot more people to come to Jesus,' said Christopher Whalen, an analyst at Institutional Risk Analytics in Hawthorne, California. 'When a ratings agency puts a whole class on watch, it will force all the credit officers to get off their butts and reevaluate everything. This could be one of the triggers we've been waiting for.'"

"The actions would be the biggest ever in the subprime market, the companies said. Insurers and pension funds may be among investors required to sell their bonds if they are downgraded, potentially driving down prices of $800 billion in subprime mortgages and $1 trillion of collateralized debt obligations, which package mortgage bonds into new securities."

And that ain't all. "S&P said it is also reviewing the 'global universe' of CDOs that contain subprime mortgages. Investors in CDOs alone stand to lose as much as $250 billion, according to Institutional Risk Analytics, which writes computer programs for auditors."

Number two (07.10.07):

"Sears Holdings Corp., the biggest U.S. department-store company, said second-quarter profit may decline by as much as 46 percent after sales fell, sending the stock to its biggest drop in more than four years."

Sears, Home Depot Say Profit Will Fall as U.S. Housing Slump Reduces Sales

Number three (07.10.07):
"D.R. Horton Inc., the second-largest U.S. homebuilder, will report a third-quarter loss after orders plunged 40 percent, and said it sees no sign of a housing rebound."

D.R. Horton to Report Net Loss After Orders Plunge

And number four (07.10.07):

"Homebuilder Ryland Group Inc. said it will report a second-quarter loss after sales plunged because of 'continued deterioration' in the housing market."

Ryland to Report Net Loss as Housing Slump Persists



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