Standard & Poor's Corp. said Monday that it has downgraded $21.18 billion of collateralized debt obligations, citing deteriorating credit quality and rating cuts on subprime residential mortgage-backed securities.
It was one of the largest groups of CDOs downgraded by S&P in recent months. Ratings on hundreds of billions of dollars of alternative-A and subprime residential mortgage-backed deals have been cut as delinquencies continue to climb and housing prices keep falling.
The credit rating company downgraded 105 tranches from 29 cash-flow and hybrid CDOs. Thirty-one of those tranches on watch for further rating cuts because a significant portion of their collateral assets are facing possible downgrades or they have significant exposure to assets rated as highly speculative.
CDOs have been at the heart of steep writedowns by big banks and brokerage firms.