View more on these topics

More write-downs in 2008 warns S&P

Securities write-downs and rising loan losses will characterize the second half of 2008 warns Standard & Poor’s.

In a gloomy report published today, the ratings agency says the current capital market conditions and continuing negative news from the US mortgage market will lead to another large wave of write-downs in the second half of 2008.

And institutions already battered from massive capital raising over the last year to compensate for securities losses will be hit hard.

Scott Bugie, credit analyst at S&P, says: “The success in future capital raising, through issues or asset sales, to compensate for additional securities write-downs, will be the key factor driving the credit ratings on many global financial institutions in the second half of this year.”

It says the present market conditions are less favorable, and financial institutions face this next wave of write-downs with reduced opportunities to raise additional capital.

Out of the $300bn in write-downs of mortgage-backed securities and leveraged loans seen in the first half of 2008, a whopping 40% of this was made up of just three firms – Citigroup, Merrill Lynch and Swiss-giant UBS.

It says the rare true sales of sub-prime MBS in 2008 were at depressed prices and it predicts this to get worse over the second half, especially in the light of the collapse of Lehman Brothers last week.

It says the unwinding of the group’s trades will place additional downward pressure on values of non-prime MBS via forced sales under unfavorable market conditions.

S&P says it expects financial institutions with material residual balances of nonprime MBS to take significant additional write-downs in second-half 2008.”

Recommended

Sad day for Solent

Solent Mortgage Services has appointed administrators to wind up the business.Paul Robinson, founder of SMS, which launched in 1989, says: “The business geared up for rapid rate of growth given the buoyant market conditions and built an infrastructure, i.e. people, technology, premises, and diverse distribution to facilitate this. “This investment was based on both historical […]

Offset can pay for private school days

The summer has drawn to a close and what a rubbish season it’s been weather-wise. It has rained for weeks with a glimmer of sunshine here and there and that’s it.

GEMHL increases rates

GE Money Home Lending has increased its rates across its First National and igroup brands blaming exceptional volatility in global financial markets.

Santander rumoured to be bidding for BoI

Santander is refusing to comment on speculation that it is considering making a bid for Bank of Ireland.The Spanish lending giant is widely thought to be on the acquisition trail following the crash in major banking shares seen over recent weeks.Industry sources speaking to Irish radio station NewsTalk say Santander is in a strong position […]

Brexit and the mid cap buying opportunities

Video update from Mark Martin, Head of UK Equities, Neptune Investment Management With the Brexit referendum scheduled for 23 June, how much risk is priced into the market and is the current volatility a long-term buying opportunity? Watch Mark Martin, Head of UK Equities, and Holly Cassell, Assistant Manager on the UK Mid Cap and […]

Newsletter

News and expert analysis straight to your inbox

Sign up
Comments