Saturday, March 10, 2007

NY Life CDO Sale Hit By Subprime Contagion

Yesterday Susan Bies, one of the outgoing Fed Governor's, stated problems in subprime remain contained to a "narrow segment" of the market. Sue, think again. NY Life is being forced to sweeten its sale of collateralized debt obligations (CDOs). NY Life Story is here.

I thought this was the funniest paragraph in a not so funny story, since my warped mind conjures up a picture of these guys hiding under the covers with thumbs inserted into their mouths crying for mommy.

"Edward Fitzgerald, fund manager for the New York Life CDO, named "Corona Borealis," didn't return a phone call seeking comment. Robert Dial, another fund manager for NYLIM, declined to comment and referred questions to Fitzgerald. "

Editors Note: These are the next areas of the market to watch - activity in CDOs, RMBS, etc. The Markit indexes on ABX swaps were excellent early warning signals for us in subprime and I'll be looking at other Markit indexes along with a few others from Merrill Lynch. Spreads are widening and that's not a good thing. The subprime credit crunch is spreading.

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