Industry News

Merrill Lynch writes down $4.5 billion in CDOs, subprime loans

Future-Proof: Navigate Threats, Seize Opportunities at ICNY 2018 | Jan 22-26 at the Marriott Marquis, Times Square, New York

Merrill Lynch & Co. said it will post third-quarter losses of up to 50 cents per share as it writes down by $4.5 billion the value of collateralized debt obligations and subprime mortgages. The write-downs "reflect in part significant dislocations in the highest-rated tranches of these securities which were affected by an unprecedented move in credit spreads and a lack of market liquidity in these securities," the investment bank said in a press release. Merrill Lynch said it was also writing down by $463 million net of underwriting fees the value of financing commitments for corporate buyouts. The bank has drastically scaled back such commitments, to $31 billion, compared with $53 billion at the end of the second quarter. Merrill Lynch will report third-quarter results on Wednesday, Oct. 24. Also today, Washington Mutual said it expects third-quarter earnings will be down 75 percent from last year, after setting aside $975 million for loan loss provisions and wri...