S&P: Conseco-Gtd Certs Lead US RMBS Downgrades in Q3.Business Editors NEW YORK--(BUSINESS WIRE)--Standard & Poor's Nov. 6, 2002--Standard & Poor's Ratings Services Ratings Service A company, such as Moody's or Standard & Poor's, that rates various debt and preferred stock issues for safety of payment of principal, interest, or dividends. said today that transaction performance played a significant role in the positive rating activity in the U.S. RMBS RMBS Residential Mortgage-Backed Securities RMBS Rambus, Inc. (NASDAQ stock symbol) RMBS Russian Mortgage-Backed Securities sector during the third quarter, as each of the 58 upgrades resulted from strong performance. By comparison, only two of the lowered ratings resulted from poor collateral collateral (kəlăt`ərəl), something of value given or pledged as security for payment of a loan. Collateral consists usually of financial instruments, such as stocks, bonds, and negotiable paper, rather than physical goods, although performance. The 73 remaining downgrades initiated during the period occurred on Aug. 9 and Sept. 19 as a result of the two downgrades involving Conseco Conseco (NYSE: CNO), originally Security Life of Indiana, is a financial services organization based in Carmel, Indiana. Conseco's insurance subsidiaries provide life insurance, annuity and supplemental health insurance products to more than 4 million customers in the Finance, which provides the limited guarantee in these transactions. The transactions that experienced rating changes during the quarter involved various types of collateral, including prime, home equity, home improvement, and nonperforming. As with previous quarters, transactions backed by prime collateral experienced the most upgrades, followed by home equity-backed transactions. However, lowered ratings outpaced raised ratings in the third quarter: 32 subprime ratings were lowered and six ratings were lowered on transactions backed by high combined loan-to-value collateral. Conventional home improvement transactions realized 36 lowered ratings. These downgrades were initiated because each of the certificates has credit support from a limited guarantee provided by Conseco Finance and monthly excess spread. "Standard & Poor's believes the uncertainty created by Conseco Inc.'s difficulties, and the fact that Conseco Finance does not enjoy regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. protection, leaves its creditors significantly vulnerable," said Ernestine Warner, a Director in Standard & Poor's Structured Finance Surveillance group. "Additionally, without the use of the limited guarantee, the monthly excess spread may be insufficient in·suf·fi·cient adj. 1. Not sufficient. 2. Incapable of proper functioning. to protect against losses during the life of the transactions." Despite the Conseco-related downgrades, however, subprime transactions experienced a rise in upgrade activity during the most recent quarter, analysts say. There were 13 raised and 32 lowered ratings on subprime transactions during the third quarter, which affected deals from 11 issuers. The transactions with raised ratings were issued between 1993 and 2000 and have significantly benefited from the shifting interest structure, which was accelerated by their relatively high prepayment Prepayment 1. The payment of a debt obligation prior to its due date. 2. The excess payment over a scheduled debt repayment amount. Notes: 1. Examples include deferred expenses such as rent and early loan repayments. 2. speeds-the chief contributor to the growth in credit support percentages for these transactions. This information is available in the report, "Structured Finance Global Ratings Roundup Quarterly: Third-Quarter Performance Trends," which may be found on RatingsDirect, Standard & Poor's Web-based credit analysis system. The article is also available on Standard & Poor's Web site at www.standardandpoors.com. Go to "Fixed Income," under "Browse (1) To view the contents of a file or a group of files. Browser programs generally let you view data by scrolling through the documents or databases. In a database program, the browse mode often lets you edit the data. See Web browser. by Sector" choose "Structured Finance," and then under "Commentary & News" click on "More" and scroll To continuously move forward, backward or sideways through the text and images on screen or within a window. Scrolling implies continuous and smooth movement, a line, character or pixel at a time, as if the data were on a paper scroll being rolled behind the screen. See auto scroll. down to the desired article, dated Oct. 15. Standard & Poor's is a leader in providing highly valued financial data, analytical analytical, analytic pertaining to or emanating from analysis. analytical control control of confounding by analysis of the results of a trial or test. research and investment and credit opinions to the global capital markets. With more than 5,000 employees located in 18 countries, Standard & Poor's is an integral part of the world's financial architecture. Additional information is available at www.standardandpoors.com. Copyright 2002, Standard & Poor's Ratings Services |
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