Is Countrywide Financial Holding on By a String?

(NAMC) – The financial sector has been taking it on the chin over the last half of 2007 due to the collapse in the sub prime mortgage sector. The first casualty was American Home Mortgage, this past summer the company collapsed and started a domino effect.

It hit every major financial institution, from banks to brokerage firms, from firms such as Citigroup to Morgan Stanley, but of course it doesn’t stop there, we have to put our focus back on the companies that face potential extinction if they do not rebound.

The company that, in my opinion, that will be the recipient of the blast to come is the largest U.S. lender Countrywide Financial Corp. Since the demise of American Home Mortgage and then the subsequent bail out by Bank of America back in August 2007, Countrywide dodged a few bullets when mortgage backed securities directly effected the banks and brokerages.

Firms such as Morgan Stanley, Citigroup, UBS, Merrill Lynch, Morgan Stanley, and the list goes on of the financial institutions that reported or pre-reported financial loses in the multi-billions due to the sub prime debacle.

But now that Wall Street is beginning to accept this, the focus is back on Countrywide Financial and companies in that sector.

Countrywide is facing a ratings downgrade, not just from the analyst but a downgrade as far as their S&P and Moody’s standings. This basically shows their credit worthiness, and when they begin to get downgraded on that level then you will see a major slip in the stock. Junk bond Status is not something they need at this point.

The reason for this is that it will become increasingly difficult for them to borrow additional funds to bail themselves out of the problems and rebound in time, well at least potentially rebound.

So at the looks of things, even though Countrywide Chairman and CEO Angelo Mozilo would adamantly disagree, Countrywide is on the ropes falling to the mat, and the ten count may be imminent if they do not get a miracle performed for them. 

We may get a dead cat bounce while institutions may try to slide out before yearend, but at the end of the day Countrywide may be punch drunk and the downslide may not be too far away.

Louis Victor
NAMC Newswire
namcnewswire.com

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NAMC Worldwide provides Investment Banking consulting services to both publicly traded and privately held companies, everything from capital raising to mergers and acquisitions. Other areas of focus are Private Equity Capital Raising and Private Commodity Transactions.

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