by Calculated Risk on 6/18/2007 01:23:00 AM

From the WSJ: Ills Deepen in Subprime-Bond Arena

A few weeks ago, the market for bonds backed by risky home loans looked like it was calming down. Now, problems are quickly mounting.
...
On Friday, credit-rating firm Moody's Investors Service slashed ratings on 131 bonds backed by pools of speculative subprime loans because of unusually high rates of defaults and delinquencies among the underlying mortgages. The ratings company also said it is reviewing 247 bonds for downgrades, including 111 whose ratings it had just lowered. All the bonds were issued as recently as last year.

The latest moves by Moody's affected around $3 billion worth of bonds, which represent less than 1% of the over $400 billion in subprime mortgage-backed bonds that were issued in 2006.
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"The wave of downgrades will continue" among subprime bonds issued in 2006, says Jay Guo, director of asset-backed research at Credit Suisse ...

These downgrades are mostly for bonds backed by second-lien loans:

Just 1.5% of bonds from 2006 that are backed by first-lien subprime mortgages have been downgraded or are being reviewed by Moody's for downgrades.