[F]rom a bond market analyst's perspective, fears of a broader contagion are overblown. Just 1% of the mortgage bonds securitized so far this year and rated by Moody's Investor Service have been downgraded or put on watch, for example. That's out of $149 billion securitized since January.
Panic? What panic? "In view of how the laws of probability have yet to be repealed, a steep jump by subprime mortgage loans share of total mortgage originations from the 9% of 1996 to 2000 to the 21% of 2004 to 2006 practically assured an upward shift in mortgage delinquencies," wrote Moody's in a report Tuesday.
As if to prove their point, the bond ratings agencies noted that delinquencies in the prime loan market had risen, but not by as much and not nearly at the magnitude of the subprime sector. Prime loan delinquencies were 2.57%, up from 2.44% in the third quarter, according to the Mortgage Bankers Association.
~ Liz Moyer, "Overblown Fears In Subprime Land?," Forbes, March 14, 2007