The concerns hinge on whether the large sales of seized collateral from the Bear Stearns funds, predominantly collateralised debt obligations backed by subprime mortgages, could spark problems for investors in similar assets.[...] A broad market repricing of this kind could also affect valuations for CDOs backed by assets other than subprime mortgages. CDO managers have been important buyers of debt, helping to fuel the boom in leveraged buy-out activity. Bankers say that, in the new issue market for such complex securities, some buyers are already demanding more to address their perception of increased market risk. Source : FT http://www.ft.com/cms/s/49213c9c-2028-11dc-9eb1-000b5df10621.html Some risk "adjustment" going on...
what's rather amazing is a lot of this junk paper sits inside bundled products that carry a AAA rating by Moody's............ so watch Moody's next week to see if some of this starts to circle the bowl....... if Moody's doesn't start downgrading big, then the fix is in..............