Once shy, twice bitten, may also apply...
The credibility of the rating's agencies, and the bonds they rate, are on the line; and I believe they are going to er on the side of caution--not the other way around. As proof, I suggest you look at all the major equity markets yesterday: They were all up substantially--the DOW 190 alone. This is what I call putting their money where their mouths are...
Well, this article came out a few days before Bear.
S&P Sees Light At The End Of The Write-Down Tunnel 
3/13/2008 3:02:44 PM A report from Standard & Poor's Ratings Services Thursday that financial companies are nearing the end of the massive asset write-downs sent stocks soaring. These write downs have roiled the stock and credit markets in recent months, and the news boosted investor confidence.
The forecast, titled â€śMore Subprime Write-Downs To Come, But The End Is Now In Sight For Large Financial Institutions,â€ť estimates that write downs could reach $285 billion for the global financial sector, although it noted that the end is in sight for major financial institutions.
â€śThe positive news is that, in our opinion, the global financial sector appears to have already disclosed the majority of valuation write-downs of subprime ABS," said Standard & Poor's credit analyst Scott Bugie, lead author of the report.
The reluctance of major financial institutions to lend money has frozen credit lines and forced the Federal Reserve to intervene on several occasions in an effort to inject liquidity into the market. Although it states that there is a light at the end of the tunnel, the S&P report warns that investors should expect further write-downs in the near future.
â€śRight now, market forces are placing further downward pressure on valuations, and we expect to see more write-downs related to these pressures in coming weeks and months,â€ť Bugie said. â€śWe believe that any near-term positive impact of reducing subprime risk in the financial system via increased disclosure and write-downs will be offset by worsening problems in the broader U.S. real estate market and in other segments of the credit markets.â€ť
In an additional report, S&P states that the majority of write-downs related to subprime securities may be behind the banks and brokers that have already announced their full year 2007 results.
â€śThere may be some additional marks to market as market indicators have shown deterioration in the first quarter,â€ť said Standard & Poor's credit analyst Tanya Azarchs. â€śHowever, when we dissect the percentage of write-downs taken against various types of exposures, in our opinion the magnitude of some write-downs is greater than any reasonable estimate of ultimate losses.â€ť
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