S&P cuts recovery estimate for CDOs

04/29/2008 | Financial Times (free content)

Standard & Poor's has cut its assumptions about the amount of money investors are likely to recover in U.S. subprime mortgage-backed bonds when the individual homeowner defaults on a loan. The new assumptions are likely to lead to downgrades of structured finance CDOs because lower expectations of recovery need a bigger cushion against potential losses to achieve the same rating, S&P said.

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