Nearly $15 Billion Goes from AAA to Junk

Calculated Risk: Fitch Downgrades $37.2 Billion of CDOs

Fitch Ratings downgraded Monday the credit ratings of $37.2 billion of global collateralized debt obligations, with more than $14 billion worth of transactions falling from the highest-rated AAA perch to speculative-grade, or junk, status.
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The rating agency said more than 60 CDO transactions are still on watch for potential downgrade, with a resolution due on or before Nov. 21.

On Monday, nearly $20 billion worth of transactions was cut from investment-grade to junk, said Kevin Kendra, managing director at Derivative Fitch.

The problem is that there are many assets that simply have no buyers, at least not at a non-bankruptcy inducing price. As such, they are illiquid, and valuless.