Sunday, Jan 27, 2008
Analysts at Bernstein Research have questioned the strength of Wall Street's sub-prime hedges, which are now under pressure and may need to be replaced, raising the risk of more writedowns.
dow jones: Financial News: Banks Have Billions In Exposure To Monolines
The top five U.S. broker-dealer banks have a combined $23 billion (EUR15.7 billion) in uncollateralised exposures to AAA counterparties, part of which is with monoline bond insurers that have been weakened by the sub-prime mortgage crisis. Monolines insure $2.3 trillion of debt, including structured credit and municipal bonds, according to research by Swiss bank UBS.
Merrill Lynch & Co. Inc. (MER) is the only bank to have reported losses in relation to its exposures to monolines, and Bernstein expects more if the outlook for monolines deteriorates further. The U.S. bank wrote down $3.1 billion of the assets in the fourth quarter last year after monoline ACA, to which it had an exposure, had its credit rating downgraded to junk status.
Posted by dangerous trading @ 11:42 PM (118 views) Add Comment
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