Wells Fargo pulls popular subprime loan from mix

(Reuters) - The company in an e-mail said it ended on Friday retail offerings of so-called 2/28 loans, which at 65 percent of all subprime mortgages last year are the staple of the industry. Payments on 2/28 adjustable-rate mortgages are based on rates that are fixed for two years and then are adjusted twice a year for the remaining 28, if the loan is not refinanced.




Decisions were partly driven by the $583 billion market for subprime mortgage bonds, where sales rely on opinions of rating companies such as Moody's Investors Service, Wells Fargo said. Rating companies in the past two weeks have unleashed a flood of downgrades on subprime bonds in response to rising delinquencies and increased their assumptions of losses that new loans will produce.


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U.S. home builder woes reach into other industries

(Reuters) - Still, several investors remain positive about the long-
term outlook for U.S. home builders, although a rebound may be
years away.




"It won't really be until 2010 before we start seeing
normal levels of activity in most parts of the country," said
Mark Zandi, chief economist of Moody's Economy.com.


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TREASURIES-Bonds fall as stocks up on muted subprime view

(Reuters) - NEW YORK, July 11 - U.S. government bond prices
dropped on Wednesday as investors bought stocks on the belief
that there may have been an overreaction to worries about the
extent of the subprime mortgage market's troubles.




However, bond investors were alert for any repeat of
Tuesday's stock market sell-off that triggered flows into the
safety of Treasuries and lifted the 10-year note to its
strongest daily performance since Feb. 27. On Tuesday, the Dow
Jones industrial average fell 148 points after Standard
& Poor's and Moody's began to cut credit ratings on about $17
billion of mortgage-related debt. The Standard & Poor's 500
index ended Tuesday's session down 1.42 percent and the
Nasdaq composite index fell 1.16 percent.


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Danone credit rating cut seen likely on Numico deal

(Reuters) - Danone's 12.3 billion euros
takeover of Numico , announced on Monday, follows an
agreement by the company last week to sell its biscuits business
to Kraft Foods Inc. .




The Numico deal, expected to generate net debt of 7 billion
euros, will likely prompt a downgrade of Danone's current A1 and
and A+ ratings from Moody's Investors Service and Standard &
Poor's, although by how much will depend on how the deal is
financed.


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Moody's downgrades Consolidated Natural Gas rating

(Reuters) - "The majority of the debt that was issued by Consolidated
Natural Gas is expected to be retired this month," Moody's
said. Dominion Resources is selling most of its exploration and
production assets for about $13.9 billion of pretax proceeds,
part of which will be used for de-leveraging, Moody's said.




Dominion said in May that it was merging its Consolidated
Natural Gas unit into the parent holding company in an effort
to cut costs and streamline its corporate structure.


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Subprime RMBS loan modifications seen rising-Moody's

(Reuters) - However, Moody's said, the economic impact of modifications
can vary among the different ownership interests within a
securitization, including that of the servicer.




The credit impact on any given class of bonds in a
securitization depends on a great number of factors, including
not only the level of losses incurred by the pool, but by the
timing of the losses, the bond's position in the deal's capital
structure and the impact of loan modifications on the
performance triggers in a securitization, said Michael Drucker,
analyst and author of the report.


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Moody's may cut Consolidated Natural Gas's ratings

(Reuters) - Dominion will assume all obligations related to
Consolidated Gas's debt. The move is targeted for the second or
third quarter of the year.




The merger would most likely result in a one notch
downgrade of Consolidated Gas's ratings to the level of
Dominion's ratings, Moody's said in a release.


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Moody's boosts credit support levels on CMBS deals

(Reuters) - In April, Moody's said it would shore up subordination or
financial protection for holders of CMBS, to head off any
potential deterioration in the solid commercial real estate
market as loose underwriting standards and slower property
appreciation posed risks.




Record high leverage, a rise in interest-only loans and
fewer investment-grade loans used in deals were among the
factors pointing to growing risks to CMBS deals, which echoed
those in place before the subprime mortgage crisis.


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IndyMac Bancorp offers $500 mln in preferred stock

(Reuters) - Moody's Investors Service rated the debt "Ba1," its highest
"junk" grade and two notches below IndyMac's "Baa2" senior
unsecured rating, an investment grade. Perpetual preferred
stock has no maturity date.




Goldman Sachs & Co. and Morgan Stanley arranged the
offering, with assistance from Citigroup Global Markets Inc.,
Deutsche Bank Securities Inc., Lehman Brothers Inc. and RBC
Dain Rauscher Inc., IndyMac said.


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