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A Subprime Hangover: Credit And Liquidity Concerns Cloud The Broader U.S. Mortgage Market Sep 07
Standard & Poors, Sep 2007
Abstract
What a difference a few weeks can make. Through mid-July, U.S. financial institutions seemed to be weathering the subprime fallout fairly well, broadly speaking. The large, complex bank sector produced strong pretax margins in second-quarter 2007, powered by strong trading revenues and loan growth. At the big U.S. broker dealers, M&A activity and healthy investment management growth resulted in solid profitability. The markets, however, changed quickly. Today, Wall Street firms, banks, and investors have almost completely lost their appetite for nonagency mortgage-backed assets. With the mortgage capital market both capacity- and price-constrained, mortgage lenders' and loan aggregators' overall profitability continues to suffer. Simply put, risk aversion in the mortgage capital markets remains at an all-time high, concern for the potential...
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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