S&P error causes investor jitters
Standard & Poor’s admitted making a $5 billion mistake in its estimate for subprime securities under review for ratings cuts.
Standard & Poor’s admitted making a $5 billion mistake in its estimate for subprime securities under review for ratings cuts.
On Thursday, Standard & Poor’s Ratings Services corrected the volume of 612 U.S. residential mortgage-backed securities under review, saying it was $7.35 billion and not the $12.02 billion originally stated.
The corrected volume, rated between the fourth quarter of 2005 and the fourth quarter of 2006, makes up 1.3% of the $565.3 billion U.S. subprime mortgage market.
When S&P originally made the blunder on Tuesday, jittery investors scurried over to U.S. government bonds, leaving riskier investments and helping drive down the benchmark ABX subprime index to a record low of 49, a plunge of 6.5 points, Reuters said.
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