Tags: s&p | cdo | structured debt | downgrade

S&P May Downgrade US CDOs Backed by Structured Debt

Monday, 19 Mar 2012 06:01 PM


Standard & Poor’s said it may lower almost all of the ratings it has assigned to U.S. collateralized debt obligations backed by structured-finance securities after a change in its methodology for grading the debt.

The bonds under review had $63 billion of balances at issuance, New York-based S&P said Monday in a statement.

These types of CDOs, which package assets such as mortgage bonds into securities with varying risks, helped spark the worst financial crisis since the Great Depression as some slices with AAA grades lost all of their value within a year.

The ratings review covers 517 bonds from 224 CDOs, with 361 carrying rankings below investment grade, or lower than BBB-, according to the statement.

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