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BEAR STEARNS MORTGAGE SECURITIES, INCORPORATED 1993-16 $115 MILLION CMOS CLASSES F-1 'AAA/V-3' BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, Dec. 30 /PRNewswire/ -- Bear Stearns Mortgage Securities, Inc.'s 1993-16 $115 million pass-through certificates, series 1993-16 class F-1, are rated "AAA/V3" by Fitch.
 The "AAA" rating indicates Fitch's confidence that the class F-1 bonds will receive at least $115 million in cash by Oct. 25, 2023. The rating does not address the principal or interest composition of payments to the F-1 bonds; only that the amounts above will be distributed by the date above.
 The "V3" Volatility Rating (V-Rating) indicates that class F-1 is moderately sensitive to changes in interest rates and prepayment rates. V-Ratings are a relative indicator of market risk on a scale of "V1" through "V5", where "V1" indicates most stable and "V5" most volatile. For comparison purposes, a current-coupon mortgage pass-through security has a volatility level equivalent to "V3".
 The bonds are supported by the aggregate cash flow from a portfolio of derivative mortgage-backed securities, which will be deposited in a trust. The portfolio is composed of U.S. Treasury POs (principal only strips), FNMA, and FHLMC agency securities. The aggregate outstanding principal amount of these bonds is expected to be approximately $84,478,000. The "AAA" rating on the bonds is based on the results of Fitch's cash flow analysis described below and reflects the high ratio (73.4%) of underlying aggregate principal to the size of the bonds. The V-3 rating reflects the potential cash flow variability of the F-1 class under severe interest rate scenarios, such as an instantaneous rise or drop of interest rates by 300 basis points.
 The rating of the class F-1 bonds is determined by analyzing the aggregate cash flow from the securities in the trust using a set of 13 interest rate movement scenarios. The scenarios were developed as part of Fitch's V-Ratings, which measure relative interest rate and prepayment risk of CMO tranches. Cash flow from each scenario indicates how the portfolio will perform in that particular interest rate and prepayment environment. The V-Rating analysis examines the certainty of cash flow regardless of its designation as principal or interest. Since actual interest rates and prepayment speeds rarely follow a single scenario, Fitch chose a wide range of scenarios to capture the varying degrees of risk inherent in the underlying securities. The Fitch scenarios range from moderate interest rate movements of 50 basis points (bps) to severe stress scenarios such as sustained instantaneous 300-bp movements and whipsaw scenarios that fluctuate up and down 200 bps.
 To determine a cash flow level sufficient to warrant a "AAA" rating, Fitch performed a worst-case analysis of the 13 scenarios described above. Fitch determined that the rated amount of $115 million could be paid under any one of the scenarios. The class F-1 bonds maintained sufficient cash flow levels under extremely stressful interest rate and prepayment assumptions, such as high mortgage prepayments, and high London Interbank Offered Rates (LIBOR).
 The securities underlying the trust are made up entirely of agency- backed CMO REMIC and SMBS securities. These securities were originally issued by FHLMC and FNMA and as such are rated "AAA". The types of classes that make up the portfolio are: stripped principal-only securities, interest-only securities, PACs, and TACs. The market risk of these securities and their effects on the bonds' yield depends on the rate of prepayment on the underlying mortgages and the level of LIBOR. Varying combinations of these factors will have differing effects on the performance of the securities. The most adverse being high rate of mortgage prepayment combined with high LIBOR rates. Fitch's CMO Volatility analysis indicates that the class F-1 Bonds are sensitive to these factors. However, the V-Rating stress test indicates sufficient stability to meet the rated obligations.
 -0- 12/30/93
 /CONTACT: Brandon Einhorn, 212-908-0672, or Glenn Costello, 212-908-0633/


CO: Bear Stearns Mortgage Securities, Inc. ST: New York IN: FIN SU: RTG

LG-SP -- NY022 -- 8108 12/30/93 15:00 EST
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Date:Dec 30, 1993
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