Comments on: One Dozen Notes on Our Crazy Credit Markets http://alephblog.com/2008/03/13/one-dozen-notes-on-our-crazy-credit-markets/ Helping Institutions and Ordinary People Invest Better by Focusing on Risk Control Fri, 12 Mar 2010 05:46:42 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Jason http://alephblog.com/2008/03/13/one-dozen-notes-on-our-crazy-credit-markets/comment-page-1/#comment-17224 Jason Fri, 14 Mar 2008 00:52:01 +0000 http://alephblog.com/2008/03/13/one-dozen-notes-on-our-crazy-credit-markets/#comment-17224 2) I think yields will change. The impetus for the change in the ratings is that the current rating system penalizes municipalities, which rarely default. With a rating system that more closely reflects the true default risk of municipalities (well, lack thereof), many municipalities will issue new bonds with lower coupons than they currently do. Lower coupons implies lower yields. It's not clear how investors will react to lower yields than they are use to. 8) I didn't read the BAC acquisition of CFC as seeking their origination channels, but as seeking their servicing operations/portfolio. CFC services approximately $1.5 trillion (or 25% of outstanding mortgages) which would give BAC a nice stream of cash. 2) I think yields will change. The impetus for the change in the ratings is that the current rating system penalizes municipalities, which rarely default. With a rating system that more closely reflects the true default risk of municipalities (well, lack thereof), many municipalities will issue new bonds with lower coupons than they currently do. Lower coupons implies lower yields. It’s not clear how investors will react to lower yields than they are use to.

8) I didn’t read the BAC acquisition of CFC as seeking their origination channels, but as seeking their servicing operations/portfolio. CFC services approximately $1.5 trillion (or 25% of outstanding mortgages) which would give BAC a nice stream of cash.

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