Interest Rate Roundup

Tuesday, January 08, 2008

Countrywide, bond insurers tanking

Intraday, Countrywide shares are tanking another 15% after falling more than 9% yesterday. Bond insurers like MBIA and Ambac Financial have also taken an intraday swan dive. No "official" news/cause for the decline is out there. But a couple of newswires carried reports about speculation -- pure speculation -- that a bankruptcy filing could be looming at Countrywide. This is pressuring the entire financial sector and causing credit spreads to widen.

Another report suggests that troubled CDOs are liquidating assets. And it doesn't help that ratings on some fomerly-AAA (you know, safe and secure just like U.S. Treasuries!) structured investment vehicles keep being cut. One of the latest is a $6 billion SIV called Victoria Finance, which just suffered a 13-level ratings downgrade from S&P.

UPDATE: CFC just out on the tape saying there is "no substance" to the bankruptcy rumor. However, the risk is definitely there unless the company can raise more capital, find a "white knight" (Bank of America taking the entire company over, for instance), or stop the deterioration in the credit market's perception of the company's financial standing.


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