Monday, February 7, 2011

Securitization Quality Declines as Wall Street Revives Issuance - Bloomberg

Securitization Quality Declines as Wall Street Revives Issuance - Bloomberg: "It’s been surprising how quickly investors have returned to accepting transactions with numerous AAA rated classes, said Blewitt, co-head of securitized assets at BlackRock, the world’s largest money manager. Some bond buyers may not be scrutinizing offering documents closely enough to find “hidden” dangers, he said. “I don’t think we’re going back to the Ponzi finance excesses that we had in 2006 and 2007 just yet, but when I get a little bit scared is when I see the old game of, ‘These are not your droids, look over there, not over here,’ ' Blewitt said, referring to a scene in the original “Star Wars” movie involving a so-called Jedi Mind Trick to evade detection. ‘Feed the Beast’ Sales of commercial-mortgage backed securities will rise to $45 billion this year after banks arranged $11.5 billion of the debt in 2010, according to JPMorgan Chase & Co. Issuance plunged to $3.4 billion in 2009 compared with a record $234 billion in 2007, according to data compiled by Bloomberg. “Commercial banks and Wall Street firms are building out platforms that will feed the beast,” said Martin Hughes, chief executive officer of Redwood Trust Inc., which in April completed the only private residential-mortgage deal in almost three years and last year began lending in the market." Read the full story at Bloomberg by following the link in the first paragraph Make big money in penny stocks today

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