U.S. Subprime Mortgage Bond Sales Plunge as Loan Delinquencies Soar (Darrell Hassler)

  Sales of bonds backed by subprime mortgages are tumbling as investors and bankers, concerned about rising delinquency rates, pull back from what had been one of Wall Street's fastest growing businesses.

  By Darrell Hassler

  April 2 (Bloomberg) -- Sales of bonds backed by subprime mortgages are tumbling as investors and bankers, concerned about rising delinquency rates, pull back from what had been one of Wall Street's fastest growing businesses.

  About $64.8 billion of securities backed mainly by loans to people with poor credit or high amounts of debt were issued this year through March 22, down 36 percent from $100.9 billion in the same period last year, according to Citigroup Inc.

  Packaging mortgages into bonds was the fastest-growing part of the debt market since 1995. Lehman Brothers Holdings Inc., Countrywide Financial Corp. and Morgan Stanley were last year's three biggest issuers of securities backed by subprime mortgages and home-equity loans, according to Citigroup.

  Subprime debt sales ``will go down a lot as lending standards get tighter,'' said Scott Simon, managing director and head of mortgage- and asset-backed securities at Newport Beach, California-based Pacific Investment Management Co., manager of the world's largest bond fund.

more

READ MORE: Bloomberg