Oh yeah, there are low-end ratings all over the place, and they trade at coupons that reflect their risk of default. See, some of these tranches were downgraded FIFTEEN and SEVENTEEN grades at a whack (!) when the contents of the sausages became clear.
You can get as arcane and detailed in perusing this field as you want. If you go to www.markit.com (which is a very complex site to use....in fact I can’t seem to find right now exactly what I wanted to show you) but is the industry nexus for pricing derivatives and CDX/CMO/CDS and all manner of bizarreness, you can delve as deep as you wish.
But you can see there there are BBB rated tranches of debt that are trading THIRTY FIVE HUNDRED BASIS POINTS (OMG!) above LIBOR; which is effectuated by a combo of coupon and STEEP face discount. http://www.markit.com/information/products/category/indices/cdx.html
Yeah, some of the debt tranches offered by MBI/ABK and rated by Moody’s fell from say “AA” to “C” overnight, which is a lot of grades! More importantly; the very idea that sombody as snooty as Moody’s could one day rate something “pretty darn lip-smacking good” and next day rate it “fetid pile of maggot-ridden rodent entrails” immediately calls into question WTH the ratings agys allegedly rate and what good they are other than bloodsucking fees out of debtors at the behest of underwriters who are indeed the folks who put “lipstick on a pig” to use a contempo saying.
This is certainly worth a repeat!
>Yeah, some of the debt tranches offered by MBI/ABK and rated by Moody’s fell from say “AA” to “C” overnight, which is a lot of grades! More importantly; the very idea that sombody as snooty as Moody’s could one day rate something “pretty darn lip-smacking good” and next day rate it “fetid pile of maggot-ridden rodent entrails” immediately calls into question WTH the ratings agys allegedly rate and what good they are other than bloodsucking fees out of debtors at the behest of underwriters who are indeed the folks who put “lipstick on a pig” to use a contempo saying.<