Seriously, sub prime mortages doesn't effect Malaysia directly. However, concerns due to lack of understanding and in depth information on sub prime mortgages partially reflected in our stock market as market close slightly above 1,200.. lowest in 6 months.
Partilaly due to foreign investors pulling out on bond market on concern about a global credit squeeze and investors seeking new opportunity of a better return in other debt market. Mounting worries on sub prime mortages crisis in the US continued to plaque the market yesterday as bankers and investors had yet to ascertain the magnitude of the fall out economy.
If gives me the shit as i am in a midst of selling my CLOs to Borrowers and Investors. Though this got NOTHING i repeat NOTHING to do with sub prime mortages...questions about it still being posed to me by potential Borrowers and Investors. Housing loans and Corporate loans lain la people! Do i have to do presentation on sub prime too...boleh baca report on sub prime on your own tak?
6 comments:
they can read abt it here.. LOL
Subprime lending, also called B-Paper, near-prime, or second chance lending, is a general term that refers to the practice of making loans to borrowers who do not qualify for the best market interest rates because of their deficient credit history. Subprime lending is risky for both lenders and borrowers due to the combination of high interest rates, poor credit history, and murky financial situations often associated with subprime applicants. A subprime loan is offered at a rate higher than A-paper loans due to the increased risk.
Subprime lending encompasses a variety of credit instruments, including subprime mortgages, subprime car loans, and subprime credit cards, among others. The term "subprime" refers to the credit status of the borrower (being less than ideal), not the interest rate on the loan itself.
Subprime lending is highly controversial. Opponents have alleged that the subprime lending companies engage in predatory lending practices such as deliberately lending to borrowers who could never meet the terms of their loans, thus leading to default, seizure of collateral, and foreclosure. Proponents of the subprime lending maintain that the practice extends credit to people who would otherwise not have access to the credit market.[1]
The controversy surrounding subprime lending has expanded as the result of an ongoing lending and credit crisis both in the subprime industry and in the greater financial markets which began in the United States. This phenomenon has been described as a financial contagion which has led to a restriction on the availability of credit in world financial markets. Hundreds of thousands of borrowers have been forced to default and several major subprime lenders have filed for bankruptcy.
more info> http://en.wikipedia.org/wiki/Sub-prime_lending
MBA,
Could it be that the investors are worried that the sub prime crisis will have a trickling effect on other areas? I mean, they see BOJ injecting then a day later bleeding funds, rating agencies making (possible) erraneous ratings (are AAA bonds really AAA, and who the heck rates these agencies anyway, perhaps the sentiment is that there are close parralels to past crisis...
Daus,
Agreed but one needs to be aware of the underlying portfolio that they are purchasing. I don't think local investors, i.e FI in Malaysia are allowed to purchase the CDOs/CLOs that are forms part of Squared and Cubes CDOs from the US sub prime. If they did, than they are just stupid not to know what are the portfolios that being bundled into the funds which most likely not the case here.
Banks need internal approvals, SCs approval before buying into all that. I'm not sure abt foreign banks position though.
In addition, if any FIs are worried, that they should be more concerns on Cagamas MBS issuances.
NSAB: Thanks :-)
MBA,
I thk u hit it square on the nail,
most investors just don't know the composition of the funds they invest in. Its always the returns that they are concerned about. Maybe some of them are worried about the indirect exposure to sub prime...
nsab, cut and paste tak kira k! ;-)
we have to submit report to SC on our NAV for the last two weeks, changes, etc! bummer!
ok this is totally unrelated to anything here but i miss our cofi sess :(
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