DOW JONES NEWSWIRES Standard & Poor's cut its ratings on $15.7 billion of U.S. collateralized debt obligations because of credit deterioration and recent ratings cuts on residential mortgage-backed securities amid continuing housing weakness.
The rating agency lowered ratings on 102 tranches from 25 cash flow and hybrid CDOs and removed 51 of them from review for possible downgrade. S&P added six ratings to its watch for possible downgrades. Ratings on 50 of the downgraded tranches face a significant likelihood of further cuts.
Thirteen of the 25 transactions are mezzanine structured-finance CDOs of asset-backed securities, collateralized in large part by mezzanine tranches of residential mortgage-backed securities and other structured-finance securities. The other 12 are high-grade structured-finance CDOs of asset-backed securities, collateralized mostly by AAA- through A-rated tranches of residential mortgage-backed securities and other structured-finance securities.
So far, S&P has cut its ratings on 4,006 tranches from 891 U.S. cash flow, hybrid and synthetic CDO transactions as a result of stress in the U.S. residential mortgage market and credit deterioration of residential mortgage-backed securities. In addition, 1,066 ratings from 438 transactions are on watch for possible downgrade.
The firm has downgraded a total of $478.15 billion of CDOs. Ratings on $12.28 billion of securities face a high likelihood of future downgrades.
S&P has been cutting its ratings on billions of dollars of Alt-A and subprime residential mortgage-backed securities deals in recent weeks after a revision to the amount of losses expected. The change occurred as delinquencies continue to climb and home prices keep falling.
CDOs, which use sliced-and-diced assets such as subprime-mortgage bonds to create customized products offering various levels of risk, have been at the heart of steep write-downs at big banks and brokerage firms.
-By Kathy Shwiff, Dow Jones Newswires; 201-938-5975; Kathy.Shwiff@dowjones.com
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(END) Dow Jones Newswires
November 13, 2008 16:59 ET (21:59 GMT)

Publié le 13 novembre 2008 Copyright © 2008 Dowjones