Countrywide Debt Help

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Good morning. After witnessing the rapid collapse of dozens of lenders this year, we can’t really be surprised at the speed of these implosions. Credit to a lender is like oxygen. When a lender can’t borrow, the end is near.

These are your Countrywide developments this morning:

--Countrywide announced it has drawn down all of an $11.5 billion credit facility to fund its operations. Countrywide also said it has significantly tightened lending standards.

--Reuters via CNBC: Fitch Ratings downgraded Countrywide’s senior debt two notches to ‘BBB-plus,’ a low investment grade, citing ‘unprecedented disruption in the capital markets’ that has crimped access to ‘primary liquidity sources.’

--Countrywide shares fell another 15% in early trading, below $18/share. The stock traded above $45/share in January.

Our take: even if Countrywide survives, there are numerous lasting developments here, notably a significant tightening of underwriting standards at the nation’s biggest mortgage company.

Comments? Thoughts? Insights?
Photo Credit: Reuters