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For those who haven't read my verbose missive: The Asset Securitization Crisis Series to date, please do. The macro stuff is free, and the micro stuff is more than worth it. I made very clear the following would happen and laid out the case from a logical perspctive as well as a historical one - while the Street and media were declaring ths a "Supbrime" crisis that would be contained. 100% of my research resources have been following this path for the last couple of months and it is starting to bear fruit. If you thought the homebuilders/insurers/CRE/investment banks and regional bank research seemed prescient, you ain't seen nothing yet!

From Bloomberg:


Bank of America Says Losses Shift to Commercial Loans

By David Mildenberg

Sept. 10 (Bloomberg) -- Bank of America Corp., the biggest U.S. consumer bank, said credit weakness is spreading to commercial borrowers from residential customers and loan losses probably will deepen in the third quarter.

Home builders unable to repay their loans are contributing to deterioration among commercial borrowers, said Brian Moynihan, head of the global corporate and investment banking unit, at a New York conference today. More than half the Charlotte, North Carolina-based bank's $13.4 billion in loans to builders are considered troubled, 19 percent are not paying interest and losses are likely to mount, Moynihan said.

Bank of America's commercial loans were $335 billion as of June 30, and a home-builder portfolio that accounts for less than 4 percent ``won't create major pain for us, but it's going up,'' he said. ``It's not pretty.''

and also:

Junk Bond Distress Levels Surge, Signaling Defaults (Update1)

By John Glover

Sept. 11 (Bloomberg) -- More than 30 percent of European high-risk, high-yield bonds are trading at distressed levels, the most in five years, stoking speculation defaults will rise.

Investors demand an extra yield over government debt of more than 10 percentage points to hold 53 of the 169 bonds in Merrill Lynch & Co.'s Euro High Yield Constrained Index. That's the biggest proportion of distressed debt since March 2003, in the aftermath of the Sept. 11 terror attacks and the dot-com crisis.

``Typically, those levels of distress would indicate that defaults are going to rise,'' said Karl Bergqwist, who manages the equivalent of about $500 million in high-yield debt at Gartmore Investment Management in London. ``We think there's much worse to come. Spreads could go a lot wider and defaults are undoubtedly going to go up.''

Defaults on European speculative-grade corporate bonds will climb to 2.3 percent in a year, from 0.7 percent now, near a record low, Moody's Investors Service said in a Sept. 8 report. Worldwide defaults will surge to 7.4 percent, from 2.7 percent.