In This Issue: The Fundamentals Of Structured Finance Ratings: The complexity of the structured finance rating system has many people concerned. Since these securities have become an important tool in financial markets, investors need to know the particulars and methods for determining these ratings. Constant scrutiny is a mainstay of this process and the interaction between ratings agencies and arrangers is considered a pre-requisite for a healthy market.Investors Are Finally Remembering What "Risk" Means: Due to the many problems in the housing and subprime mortgage markets, investors have a more conservative mindset. They focus more on risk and now reject new issuances which in prior periods seemed much more attractive. This investor pull-back has contributed to the current turbulence in the global marketplace and, if it continues, could cause economic chaos. Asian Economies Able To Withstand Current Liquidity Squeeze: Can the Asian economy weather the storm that has recently loomed over the global marketplace? With credit and equity markets declining and continued volatility in the financial markets, there are many concerns and risks ahead. But despite these anticipated roadbumps, Asian economies seem poised for solid future growth. Investment Banking And Trading: Stressing For A Tougher Environment: Rising delinquencies on U.S. subprime mortgages have sparked the recent bout of market turbulence. There are many similarities between problems in the current environment and that of the volatile periods in 1998. Although not an exact rerun, today's market resembles 1998 sufficiently enough to be a reasonable model for a stress test. 195 Subprime RMBS NIMS Classes Downgraded: Surveillance And New Issue Assumptions Revised: Standard & Poor's lowered its ratings on 195 classes and affirmed its ratings on two classes of U.S. NIMS backed by U.S. subprime mortgage securities issued from the beginning of October 2005 through the end of December 2006 and on which rating actions were taken on July 12, 2007. These actions affect a total of 85 subprime RMBS NIMS transactions. 13 U.S. Alt-A RMBS NIMS Classes Downgraded : Standard & Poor's lowered its ratings on 13 classes and affirmed its ratings on three classes of U.S. NIMS backed by U.S. Alternative-A (Alt-A) mortgage securities issued from the beginning of October 2005 through the end of December 2006. These actions affect a total of 11 U.S. Alt-A RMBS NIMS transactions. Structured Investment Vehicles: Under Stormy Skies, An Updated Look At The Weather: Standard & Poor's receives weekly surveillance reports from each of the structured investment vehicles (SIVs) that it rates. Currently, all of these SIVs have liquidity facilities in place and are passing their liquidity tests. The SIVs' liability structures, coupled with their current cash, access to third party liquidity, and asset diversification, are positioned for an orderly de-leveraging if necessitated by funding stress.
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