SPML securities downgraded to negative

Laura Stavro-Beauchamp
24-Jul-2008
Lehman Brothers subsidiary Southern Pacific Mortgages Limited has seen two of tranches of its residential mortgage-baked securities downgraded to negative by Fitch Ratings.
The sub-prime lender halted new lending on April 2 but structures were kept in place to service existing loans held by the company.

Fitch has revised the outlook on the securities after seeing arrears of more than three months rise to 28.94% and 31.87% of each book in June.

Fitch says: “These levels are significantly higher than those seen in other UK non-conforming transactions at the same level of seasoning."

The ratings agency says that as the loan books continue to pay down the losses will become more pronounced.

Fitch expects that losses like these are likely to increase in all UK transactions due to the deteriorating housing market