GLG News by Asset Backed Securities Experts

Maureen BoltonPrincipalGlobal Capital Access

Schwartz May Be Smooth, But Spector Succeeded In Creating Bear Stearns' Primary Source of Growth

August 8, 2007

Analysis of:Bear Stearns Heir Apparent Tries to Restore Some Faith | www.nytimes.com

This article is important because it introduces the reader to Alan D. Schwartz, the new sole President of Bear Stearns, a dominant player in the mbs markets and raises the question of whether he can assure bankers regarding Bear's ability to retain the same access to the same money at the same rates.  The article also questions whether Bear Stearns can be successfully run by an investment banker and whether an outside investor may be solicited or decide to take advantage of Bear's lower stock price and take a sizeable position.  Current market conditions have caused the collapse of two hedge funds run by Bear and a crisis in confidence among its lenders. 

Maureen BoltonPrincipalGlobal Capital Access

China's Media Mirage

July 26, 2007

Analysis of:Cracks in the Great Wall of China | www.theglobalguru.com

Recent discoveries regarding Chinese distribution of poisonous toothpaste, dog food and candy should cause us to reassess China's position as an Economic powerhouse. Sure, the Japanese and Koreans once made dodgy products, but their mistakes were due to their learning curve, as opposed to a deliberate deception in order to save money by swapping poisonous materials for more expensive ones. In this article, Nicholas Vardy cogently compares the mirage of China created by the media with the cold reality of its shaky economic state.

Maureen BoltonPrincipalGlobal Capital Access

The Fed's estimates of subprime credit losses are irresponsible.

July 24, 2007

Analysis of:Subprime Losses Could Cost $100 Billion | newsmax.com

This article summarizes Fed Chief Ben Bernanke's recent testimony last week before the Senate Banking Committee and the House of Representatives. the Subprime Mortgage/housing market and the expansion of the Federal Regulators' role in monitoring mortgage lenders. Mr. Bernanke's remarks regarding both of these subjects are extremely significant, as hundreds of billions of subprime mbs and CDOs invested in such securities will be impacted by how the Fed views the damage caused by improper lending/underwriting and describes its impact on the overall potential for continued economic growth.  

Joseph SmithPresident and CEODefault Mitigation Management

Is the end in site? real estate issues

July 24, 2007

Analysis of:What Could Topple Bulls' 'Wall of Worry'? | online.wsj.com

The implication in the prior articles is that the issue is over with sub-prime. It is not, it just first manifested istelf there. The Alt A product is now showing higher delinquencies then forcasted. The bigger issue is the resets, number of loans (inventory) on the market and depreciating home values.

Maureen BoltonPrincipalGlobal Capital Access

Subprime Crisis? What Subprime Crisis?

June 4, 2007

Analysis of:Housing Boom 2.0 | money.cnn.com

Thanks to the recent increase in subprime mortgage delinquencies and defaults, the media has finally divulged three of the lesser known US mortgage industry practices. 1) Credit scores are not (or should not be) the sole factor in categorizing borrowers as “prime” or subprime”. 2)Brokers are compensated almost twice as much for bringing lenders subprime vs. subprime loans. This provides more than enough reason to put a borrower in the “subprime” camp, regardless of the qualification process. 3) Despite the deluge of information regarding mortgage products and interest rates that is made available to all of us via television, radio and newspaper ads-not to mention the internet, homebuyers most frequently rely solely on their realtor to assist them in obtaining a mortgage..

Maureen BoltonPrincipalGlobal Capital Access

CDS Investors Claim Conflict if Subprime Borrowers Are Offered Modifications.

June 1, 2007

Analysis of:Gazprom refuses help with Shtokman | search.ft.com

This FT article brings up an issue that most of those interested in the subprime mortgage sector have been discussing –modifications for borrowers who are willing but not able to pay their mortgages. Most of the discussion has focused on legal and tax issues –Can you modify a loan within a REMIC? Will doing so destroy true-sale status? But this article describes a new issue: CDS investors, (i.e. those taking a short position in specific subprime mbs deals) claiming that loan modifications will minimize losses in subprime rmbs and therefore negatively impact the value of their CDS. To make matters worse, the broker that sold them the CDS is the same broker that structured and sold the subprime rmbs. Do we have a conflict here?

Maureen BoltonPrincipalGlobal Capital Access

Derivatives for Dummies

April 25, 2007

Analysis of:At the Risky End of Finance | www.economist.com

This article, published last week's Economist, is the first article purporting to explain the global credit derivative market that I have read which isn't full of algebraic formulas.

It is a cogent and clear primer on derivatives and would be helpful to investors, clients and portfolio managers who are not yet familiar with derivatives. 

In addition to explaining how derivatives are structured, their purpose in the fixed income markets and their past and probable impact on risk management, the article offers significant food for thought on whether derivatives will do their job (i.e. mitigate the impact of credit defaults) when the bond market tanks.

Maureen BoltonPrincipalGlobal Capital Access

Foreclosure is Far From the Only Option

March 28, 2007

Analysis of:Subprime Loan Servicers Step Up Loss Mitigation Efforts to Avoid Foreclosures | www2.standardandpoors.com

This Standard & Poor's report, released March 14, 2007 provides both crucial information and comfort to investors in subprime mbs or subprime mortgage originators. 

In light of the recent media blitz about increased defaults in subprime mortgages, S&P contacted each major Servicer and "Special Servicer"  to gauge their preparedness for the deluge of defaults subprime mortgages are expected to experience.

A cogent summary, it provides an introduction and succinct explanation of loss mitigation, how it is implemented by the Servicer/Special Servicer and gives one an idea of how a few of the largest players plan to approach this anticipated problem. 

It is no surprise that Foreclosure is not at the top of any of the servicers' plans.  In addition to defining "Loss Mitigation," the report describes the economic and operational aspects of the various alternatives to foreclosures.

Maureen BoltonPrincipalGlobal Capital Access

Run For Cover

March 23, 2007

Analysis of:US Banks Move into Covered Bonds | www.efinancialnews.com

This article is important because it announces the willingness of US mortgage lenders, most of which are banks, to supplement their typical funding mechanism (i.e. mbs) to covered bonds. 

The article also provides a brief explanation of the covered bond structure and its authors indicate that several US banks are poised to follow WAMU and Bank of America and start their own covered bond programs.

Understanding the Covered Bond structure is crucial; If investors continue to avoid the US mortgage market;this funding mechanism will be adopted by more and more lenders.

Maureen BoltonPrincipalGlobal Capital Access

Like it or Not, Subprime Loans Are Here To stay

March 13, 2007

Analysis of:New Century's Trials Are An Opportunity | www.forbes.com

This article is important because it contains a detailed and substantiated explanation of why the current problems with subprime lenders are an opportunity and why, despite the predicitions of just about every newspaper in the country, subprime loans are here to stay.

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