Morgan Stanley Forecasts $1.7B in MBS Losses
Morgan Stanley has indicated that it has the possibility of $1.7 billion in losses related to mortgage backed securities (MBS) deals, according to Reuters. The deals occurred between 2006 and 2008.
One of the largest claims is related to Cheyne Finance. That was a structured product involving subprime mortgage bonds that plummeted in value. The claimants are seeking compensatory and punitive damages and Morgan Stanley is forecasting a potential loss of $983 million, according to documents filed with the Securities and Exchange Commission (SEC).
The next claims filed by Citigroup are as follows: One could result in a loss of roughly $269 million. That claim is related to a deal tagged Capmark VI CDO. Another claim for STACK 2006-1 CDO could result in a loss of $240 million. Both were related to credit default swaps.
The other potential loss that was in the forecast was a $223 million mortgage backed securities (MBS) deal that Morgan Stanley put together with MBIA Corporation in 2007.
Morgan Stanley says that the forecast of $1.7 billion in potential losses does not include ancillary items like attorneys’ fees, interest and costs.