It's pretty clear that Alt-A is getting messy. Moody's Investors Service said Monday morning that it had downgraded the ratings of 163 tranches from 15 ALT-A RMBS deals issued by an affiliate of Bear Stearns & Cos. Seventy-eight of the downgraded tranches remain on review for possible further downgrade, Moody's said, while 155 additional tranches were placed on review for a possible future downgrade. The agency cited "higher than anticipated rates of delinquency, foreclosure, and REO in the underlying collateral relative to credit enhancement levels" as rationale for the downgrade, although it did not immediately provide information on affected dollar amounts. A list of affected deals and tranches is available here. More than a few investment grade tranches got knocked down in this latest swing by the rating agency. Affected deals include a majority of Alt-A issuances from 2005 to 2007:
  • Bear Stearns ALT-A Trust 2005-7
  • Bear Stearns ALT-A Trust 2005-8
  • Bear Stearns ALT-A Trust 2005-9
  • Bear Stearns Alt-A Trust 2005-10
  • Bear Stearns Alt-A Trust 2006-1
  • Bear Stearns Alt-A Trust 2006-2
  • Bear Stearns Alt-A Trust 2006-3
  • Bear Stearns Alt-A Trust 2006-4
  • Bear Stearns Alt-A Trust 2006-5
  • Bear Stearns Alt-A Trust 2006-6
  • Bear Stearns Alt-A Trust 2006-7
  • Bear Stearns Alt-A Trust 2006-8
  • Bear Stearns Alt-A Trust 2007-1
  • Bear Stearns ALT-A Trust 2007-2
  • Bear Stearns ALT-A Trust 2007-3
Bear Stearns shared roiled after news of the downgrade, which fueled speculation that the Wall Street firm may be facing a cash crunch. Shares were down roughly 10 percent when this story was published, according to data from Yahoo! Finance. For more information, visit Disclosure: The author held no positions in any publicly-traded companies mentioned in this story when it was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.