This is a once-in-a-lifetime trade

Escrito el 30 Mayo 2007 por Juan Toro en Financial Markets

This is how one fund managers sees the opportunities offered by been short sub-prime mortgage bonds. These are US bonds backed by home loans from less creditworthy borrowers that became well know in mid February when the sub-prime crisis hit the street. Though there is a myriad of these bonds there is a benchmark index called ABX that is tradable and tracks different sectors of this market. The most frequently traded ABX index (http://www.markit.com) corresponds to mortgage-backed bonds rated BBB and issued in 2006. In February the ABX fell 30 %. This sharp drop was initiated by shaky conditions in the sub-prime markets. Foreclosure rose in the US and many lenders got out of business. The performance of the ABX index was largely exacerbated by hedge funds


shaz 1 Junio 2007 - 08:03

great post

Foreclosure Homes Database 24 Julio 2007 - 19:13

Government officials are trying to reduce the number of foreclosure homes, the number of foreclosures are really up and people are investing more and more on this market according to especialists of http://www.foreclosureconnections.com/. Will government officials really be able to reduce the number?

Juan Toro 27 Julio 2007 - 18:19

Regulation in been called to avoid the loose standards of mortgage lending that has been around lately. To stimulate home ownership does not mean to loose standards. Regulation can help to avoid foreclosures. Moreover, mandates can be sent from the Government to sweeten payments obligations to avoid foreclosure.
The biggest problems is obviously further housing price falls that can damge the collateral.

On the issue that more people are investing on MBS, I doubt it.

styczen 5 Enero 2014 - 16:14

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