Roundup: Financial Market Freakout
by John Little on 9/08/2007Forbes
Don’t go on that vacation just yet. Evidence that U.S. subprime mortgage debt woes have spread to Europe has rattled investors, who dumped shares of major banks and brokers.
MarketWatch
In the past two weeks, another 13 corporate loan or bond deals have been postponed or reduced, representing slightly less than $43 billion, according to new research released Thursday by Baring Asset Management. that lifts the total number of deals pulled since June 22nd to 46, analysts at the firm said. They valued those at more than $60 billion. Last year, no pulled deals were counted by the firm’s research staff.
CNN Money
The Dow suffered its second worst session of the year Thursday as worries about the global credit market sparked a broad selloff in stocks, following a three-session rally. Bond prices rose as jittery investors dumped stocks in favor of the so-called safer haven of Treasurys. According to early tallies, the Dow Jones industrial average tumbled 383 points, its biggest one-day point loss since Feb. 27, when it plunged 416 points on worries about a global growth slowdown. The Dow’s decline Thursday equaled a loss of 2.8 percent.
Bloomberg
Rising delinquencies in the subprime mortgage market are prompting lenders to limit the availability of credit, which may mean Americans buy fewer cars and spend less on vacations. The slackening expansion won’t force the Federal Reserve to lower interest rates for the rest of the year as officials stay focused on taming inflation, economists said.
Financial Times
Home Depot is set to lower the $10.3bn sale price for its construction supply business after credit market turmoil forced its private equity bidders to ask the second largest US retailer to renegotiate the terms of the deal.
CNBC
American International Group, one of the biggest U.S. mortgage lenders, warned on Thursday that mortgage defaults are spreading. While saying that most of its mortgage insurance and residential loans were safe, AIG made a presentation to analysts and investors that showed delinquencies are becoming more common among borrowers in the category just above subprime.
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