Inevitable Mortgage Market Implosion Watch
You’ve all seen the stomach-churning graphs of the ABX indices of subprime-mortgage-backed securities and their unstoppable plunge toward zero. (If you haven’t, here’s some!)
But did you know that so far, there haven’t been any actual writeoffs on these trades, just mark-to-market losses?
Buried deep in this press release from Markit: the 2006-vintage BBB-minus tranche has suffered a $13,000-per-milion writeoff.
That’s the first writeoff on these, and it won’t be the last. Expect more shenanigans over the next few months as more and more real-money losses start to emerge further and further up the ratings scale.