World News Trust World News Trust
World News Trust World News Trust
  • News Portal
  • All Content
    • Edited
      • News
      • Commentary
      • Analysis
      • Advisories
      • Source
    • Flatwire
  • Topics
    • Agriculture
    • Culture
      • Arts
      • Children
      • Education
      • Entertainment
      • Food and Hunger
      • Sports
    • Disasters
    • Economy
    • Energy
    • Environment
    • Government
    • Health
    • Media
    • Science
    • Spiritual
    • Technology
    • Transportation
    • War
  • Regions
    • Africa
    • Americas
      • North America
      • South America
    • Antarctica
    • Arctic
    • Asia
    • Australia/Oceania
    • Europe
    • Middle East
    • Oceans
      • Arctic Ocean
      • Atlantic Ocean
      • Indian Ocean
      • Pacific Ocean
      • Southern Ocean
    • Space
  • World Desk
    • Submit Content
  • About Us
  • Sign In/Out
  • Register
  • Site Map
  • Contact Us
  • Russia's War and the Global Economy | Nouriel Roubini
  • U.S. Considers Radical Rethinking Of Dollar For Today's Digital World | David Gura
  • Why is Israel Amending Its Open-Fire Policy?: Three Possible Answers | Ramzy Baroud
  • WATCH: Republican National Committee Abandons America
  • ‘Previously Unknown Massacres’: Why is Israel Allowed to Own Palestinian History? | Ramzy Baroud
  • The Revolt of the Imagination, Part One: Notes on Belbury Syndrome | John Michael Greer
  • Human gut bacteria have sex to share vitamin B12 | University of California - Riverside

Subprime Defaults to Soar, Hurt Lenders, Funds Say (Jenny Strasburg)

More items by author
Categories
Edited | Commentary -- WNT Selected
Tool Bar
View Comments

   ``We believe we are in the early stage of a correction in this market and that the market will eventually implode,'' New York-based Paulson & Co., which manages $11 billion, said in a letter to investors last week.

  By Jenny Strasburg

  March 15 (Bloomberg) -- Harbinger Capital Partners and Paulson & Co., hedge-fund managers who profited when subprime- mortgage defaults surged, told investors that delinquent loans will soar and more lenders will disappear.

  ``We believe we are in the early stage of a correction in this market and that the market will eventually implode,'' New York-based Paulson & Co., which manages $11 billion, said in a letter to investors last week. Paulson said bad loans held by the riskiest borrowers will ``skyrocket'' and ``most, if not all, of the independent originators will go bankrupt.''

  Paulson and New York-based Harbinger posted record gains last month on credit derivatives that increased in value as prices for securities backed by subprime loans fell. Paulson's 8-month-old credit fund gained 67 percent, swelling assets to almost $2 billion. Harbinger's $6 billion distressed-debt fund returned 8.1 percent, according to an investor update. Both firms said they continue to bet loan defaults will rise.

  Investors holding mortgage-backed bonds stand to lose $100 billion from defaults on $10 trillion in outstanding home loans, Citigroup Inc. bond analysts said this month. Hedge funds have profited from the rising costs of insuring against defaults and from fears that Wall Street will finance fewer subprime loans, hurting new-home sales and the economy.

  Banks ``will shut down their origination platforms,'' and the business of pooling subprime loans into packages of securities ``will all but disappear,'' Paulson said in its letter. ``While the bonds have fallen significantly, we think they have much further to fall.''

more

READ MORE: Bloomberg

back to top
  • Created
    Saturday, March 17 2007
  • Last modified
    Wednesday, November 06 2013
  1. You are here:  
  2. Home
  3. All Content
  4. Edited
  5. Subprime Defaults to Soar, Hurt Lenders, Funds Say (Jenny Strasburg)
Copyright © 2022 World News Trust. All Rights Reserved.
Joomla! is Free Software released under the GNU General Public License.