Friday, March 14, 2008

S&P Says End in Sight for Writedowns on Subprime Debt

Standard & Poor's, the ratings company criticized for missing the beginning of the mortgage collapse, now says the end of subprime writedowns is in sight.

Writedowns from subprime-tied securities will probably rise to $285 billion, or $20 billion more than S&P forecast two months ago, S&P said today in a report. More than $150 billion have been reported already by banks, brokers and insurers, the firm said. S&P raised its estimate as it assumes deeper losses on collateralized debt obligations.

S&P's report helped prompt a rally in U.S. stocks and a decline in Treasuries. The S&P 500 Index rose 6.71 to 1315.48 in New York, after earlier falling as low as 1282.11. The benchmark 10-year Treasury note erased gains after the report. The yield increased 7 basis points to 3.53 percent. It earlier touched 3.38 percent, the lowest level since Jan. 23, the day after the central bank made an emergency cut in its target lending rate.

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