More bad news hitting the Wall Street again on Thursday. Countrywide Financial Corp., the nation’s largest mortgage lender said it had borrowed $11.5 billion from a group of 40 banks to fund loans in a move that shows just how deep the lending crisis has become – reported AP.
Countrywide shares fell $5.14, or more than 24 percent, to $16.15 in afternoon trading. The stock has lost more than half its value since January. President and Chief Operating Officer David Sambol said “Countrywide has taken decisive steps which we believe will address the challenges arising in this environment and enable the company to meet its funding needs and continue growing its franchise.”
On Wednesday, Merrill Lynch & Co. downgraded Countrywide to “Sell,” just days after calling it a “Buy,” attributing the change to the rapid deterioration of the credit market. Credit rating agency Moody’s Investors Service downgraded Countrywide’s senior debt rating to “Baa3” (lowest investment-grade mark) from “A3,” citing Countrywide’s funding problems. A ratings downgrade essentially makes it more expensive for a company to borrow money. Countrywide could be further downgraded if it continues to face liquidity problems.
So, with this latest confirmed problem with Countrywide, it’s expected the falling knife will continue to do its work to the other regional stock market including Asian when the trading bell starts on Friday. I wonder if any future traders made any great fortune from such plunge.
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August 16th, 2007 by financetwitter
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