S&P downgrades another $2.3 billion in subprime CDOs

Standard & Poor's Ratings Services downgraded its ratings Thursday on $2.3 billion in collateralized debt obligations (CDOs) that rely in part on subprime mortgages for collateral.

The new ratings on 50 tranches from 12 CDOs stem from earlier downgrades by Standard & Poor's of more than 1,000 classes of mortgage-backed securities (MBS) held by some of the downgraded CDOs.

On July 12, 2007, Standard & Poor's lowered its ratings on more than 600 classes of MBS classes collateralized by first-lien subprime mortgages. A week later, the ratings agency dowgraded more than 400 MBS classes backed by subprime loans.

Most recently, Standard & Poor's on Aug. 7 said it was reviewing more than 200 MBS classes backed by Alt-A mortgage loans for possible downgrades.

Thursday's downgrades bring the total number of downgraded CDO tranches to 75, with an estimated value of $3.29 billion.

Another 127 tranche ratings from 41 cash flow and hybrid CDO transactions are currently on CreditWatch negative for possible downgrade.

Standard & Poor's said it affirmed its previous ratings on another 19 tranches from six CDOs, removing them from CreditWatch negative.

All rights reserved. This content may not be used or reproduced in any manner whatsoever, in part or in whole, without written permission of Inman News. Use of this content without permission is a violation of federal copyright law.