Thursday, December 06, 2007

Hitting The Wall

Here's what's scaring the daylights out of our Jolly Bankers. LATimes (12.06.07):
"A so-called collateralized debt obligation managed by Credit Suisse Group liquidated its mortgage bonds and related derivatives, recording a loss of more than 75% on the securities, Standard & Poor's said Wednesday.

About $165 million of Adams Square Funding I's notes, including debt originally rated AAA, won't be repaid, S&P said, based on information from a trustee."

Moody's sees capital risk at MBIA

There's a ton of this stuff out there. This liquidation is very spooky news. Financial Times (12.06.07):
"Adams Square went into liquidation in November, but the results of the asset sale have only just filtered through. Adams Square I has been liquidated at less than 25 per cent of par value. Which, in financial parlance, is a wipeout. As S&P explains:

'Based on the notice we received, the trustee anticipates that proceeds will not be sufficient to cover the funded portion of the super-senior swap in full and that no proceeds will be available for distribution to the class A, B, C, D, or E notes.'"

CDO wipeout: AAA noteholders get nothing

"In other words, note holders got nothing.... AAA notes? Nothing. Not a penny. This is a fairly big leap from even the most dire CDO news we’ve heard in the past couple months, where losses of the 10-30 per cent order were the most bearish estimates for AAA tranches."

As opposed to a 75% loss.

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