S&P adjusts CDO risk model, ouch!

In a technical adjustment, Standard & Poor's has announced that it has revised its expected losses for 2006 vintage subprime collateral to 19 percent from 14 percent, due to rising delinquencies. The Financial Times notes that this will likely result in even more downgrades of CDOs of the 2005 to 2007 vintage. So we can expect another round of CDO defaults that require liquidation. All will be hit, even the super seniors. Basically, we're looking at more writedowns and pain for sponsors. So it would be a mistake to think that the CDO and SIV markets have put the worst behind them. We still cannot see a bottom.  

For more:
- here's the Financial Times item