Troubled CLOs second priority notes are now in default, says Moody's

By Mike Peterson

Moody’s says it now considers the originally Aa2 class B notes of a 2002 CLO to be in default, after a long legal battle which has resulted in coupons being held in an escrow account

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TAGS: Law suits

Comment by: Douglas Watson. Posted 14 years ago [2010-02-25 16:35:02]

This is another example of slow and inaccurate surveillance by the rating agencies, Moody's in this case. Moody's follows an "expected loss" rating philosophy, so one is left wondering if a full recovery is expected, why B1 for the Class B? Smells more like a mid to high Ba to me! Worse is the misleading signal on the seniors. When a rating agency upgrades a security which is on watch for downgrade, it's a safe bet they've been asleep for some time!