{"id":477,"date":"2007-03-10T21:58:31","date_gmt":"2007-03-10T21:58:31","guid":{"rendered":"http:\/\/cryptogon.com\/?p=477"},"modified":"2007-03-10T21:58:31","modified_gmt":"2007-03-10T21:58:31","slug":"goldman-merrill-almost-junk-their-own-traders-say","status":"publish","type":"post","link":"https:\/\/www.cryptogon.com\/?p=477","title":{"rendered":"Goldman, Merrill Almost &#8216;Junk,&#8217; Their Own Traders Say"},"content":{"rendered":"<p>Via: <a href=\"http:\/\/www.bloomberg.com\/apps\/news?pid=20601087&#038;sid=azrxhCZbHMLk&#038;refer=home\" target=\"_blank\">Bloomberg<\/a>:<\/p>\n<p><em>Goldman Sachs Group Inc., Merrill Lynch &#038; Co. and Morgan Stanley, which earned a record $24.5 billion in 2006, suddenly have become so speculative that their own traders are valuing the three biggest securities firms as barely more creditworthy than junk bonds.<\/p>\n<p>Prices for credit-default swaps linked to the bonds of the New York investment banks this week traded at levels that equate to debt ratings of Baa2, according to Moody&#8217;s Investors Service. For Goldman, Morgan Stanley and Merrill that&#8217;s five levels below the actual Aa3 rating on their senior unsecured notes and two steps above non-investment grade, or junk.<\/p>\n<p><strong>Traders of credit derivatives are more alarmed than stock and bond investors that a slowdown in housing and the global equity market rout have hurt the firms.<\/strong> Merrill since 2005 has financed two mortgage lenders that subsequently failed and bought a third, First Franklin Financial Corp., for $1.3 billion.<\/p>\n<p>&#8220;These guys have made a lot of money securitizing mortgages over the years in a mortgage boom time,&#8221; said Richard Hofmann, an analyst at bond research firm CreditSights Inc. in New York. &#8220;The question now is what is the exposure to credit risk and what are the potential revenue headwinds if they&#8217;re not able to keep that securitization machine humming along.&#8221;<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Via: Bloomberg: Goldman Sachs Group Inc., Merrill Lynch &#038; Co. and Morgan Stanley, which earned a record $24.5 billion in 2006, suddenly have become so speculative that their own traders are valuing the three biggest securities firms as barely more creditworthy than junk bonds. Prices for credit-default swaps linked to the bonds of the New [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[],"class_list":["post-477","post","type-post","status-publish","format-standard","hentry","category-economy"],"_links":{"self":[{"href":"https:\/\/www.cryptogon.com\/index.php?rest_route=\/wp\/v2\/posts\/477","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.cryptogon.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.cryptogon.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.cryptogon.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.cryptogon.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=477"}],"version-history":[{"count":0,"href":"https:\/\/www.cryptogon.com\/index.php?rest_route=\/wp\/v2\/posts\/477\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.cryptogon.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=477"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.cryptogon.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=477"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.cryptogon.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=477"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}