Moody's May Cut A$83 Billion of Mortgage-Backed Bonds

Bloomberg (02/04/08); Cochrane, Laura
Approximately A$83 billion of Australian mortgage-backed bonds insured by PMI Group Inc., making up 45 percent of the country's mortgage-backed securities market, could be targeted for downgrade by Moody's Investors Service. There are concerns that problems in the U.S. mortgage market could make it difficult for the Walnut Creek, Calif.-based mortgage insurer to pay claims. Moody's says the review covers 325 tranches of debt in 144 mortgage-backed securities, with 90 percent of the debt boasting Aaa ratings. Experts say Australia's mortgage-backed securities market will suffer if a downgrade occurs, putting a damper on liquidity and making it difficult for lenders to fund mortgages.