S&P Downgrades Prime Jumbo MBS Deals

Standard & Poor’s, whose credit ratings are designed to provide rankings among issuers and obligations of overall creditworthiness, said Tuesday that it downgraded several securities backed by large, higher-quality mortgages.

From MarketWatch:  S&P said it lowered ratings on 102 classes from 33 U.S. prime jumbo residential mortgage-backed securities that were issued from 1998 to 2004. The rating agency also affirmed ratings on 669 classes from 32 of the downgraded deals, as well as 34 other deals.

“The downgrades reflect our opinion that projected credit support for the affected classes is insufficient to maintain the previous ratings, given our current projected losses,” S&P said in a statement.

emphasis added

Although credit risk is just one dimension of valuing jumbo MBS,  the high vulnerability of  ’98-’04 deals, and the decline in credit levels  suggest that the credit quality of the underlying jumbos is still deteriorating.

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