S&P Cuts, Reviews $34 Billion of Alt-A Securities
Nothing like getting it right the second, er third, er ?th time:May 28 (Bloomberg) -- Standard & Poor's cut or may lower ratings on almost $34 billion of securities backed by Alt-A mortgages, the firm's largest downgrade for the type of debt.
Ratings on 1,326 classes of the bonds created in the first half of 2007 were reduced, New York-based S&P today said today in a statement. S&P put another 567 similar bonds with AAA ratings under review. Based on the balances of the bonds at issuance, 14 percent of the total from the period were either cut or placed under review.
Late payments of at least 90 days and defaults among Alt-A loans underlying bonds issued last year rose to 6.64 percent as of April bond reports, up 65 percent since January, S&P said. Defaults on all types of home loans have surged amid record U.S. property-price declines.
``Monthly performance data reveal that delinquencies and foreclosures continue to accumulate,'' New York-based S&P analysts Scott Davey and Ernestine Warner wrote in the statement.
S&P has downgraded 66 percent of 2007 subprime-mortgage securities, by the number of classes, and 96 percent of 2007 second-mortgage bonds. The firm's downgrades on collateralized debt obligations used to repackage mortgage bonds into new securities total more than $350 billion, its biggest cuts amid the housing slump.