Moody's plans to slash CSO ratings
Moody's says it will slash the ratings of most of the corporate synthetic CDOs (CSOs) it rates by between three and seven notches
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It seems incredible that the Monolines are surviving longer than many financial institutions. I thought a combination of Agencies and equity investors would have put this part of the industry out of business long ago...
Presumably CDPCs will also get downgraded because of similar methodology. They, along with the lower-rated CSO tranches, will trigger additional capital requirements at the banks that have used CSOs and CDPCs to hedge their positions. Thereby causing central banks to provide more bailout money. Moody's just published something on different risks to financial institutions. Wonder if they added themselves to the list?
Does anyone know how big the CSO market is? Duane Park manages 4 deals which were liquidated this week (Icelandic bank, Lehman, ACA exposures), and the intermediary bank backstopping the default swaps is absorbing losses (not sure of the magnitude). Investors have asked how big is the potential loss to fin'l intermediaries?
Anything on Moody's re-adjustment of cash CLO assumptions? I would suggest they start scratching their heads on this too (and create a total mess in the market as a result of their inaction and then over-reaction) now that the first loan credit events have taken place.
I also heard Moody's is going to return the fees they charged for inaccurately rating these transactions......just kidding, but that would be only thing they could do now to gain any credibility
As certain market participants have noted since 1H07 the ratings agencies are struggling to play catch-up to market developments. Doubling or tripling the default correlation to match the market is akin to taking a handful of aspirins to battle an incurable disease. There comes a point where all credibility is lost - they are well past it in my view.
CLOs
- Voya refis 2018 vintage CLO 16 hours ago
- New Ares CLO keeps pricing tight 17 hours ago
- Napier Park prices first European new issue CLO of the year 17 hours ago
- Third time's the charm as 2013 vintage CLO gets reset 1 day ago
- European reset highlights weakness in mezz despite robust senior demand 2 days ago
Comment by: Anonymous. Posted 15 years ago [2009-01-19 14:11:04]