You didn’t think it was all over, did you?
Parts of the credit world remain plagued by strikingly high levels of fear and mistrust, notes Gillian Tett in her Friday column:
Indeed, in some arenas, such as mortgage-linked securities, sentiment now seems to be getting worse, not better.
Take the ABX index: Far from perfect - but now enjoying the unfortunate distinction of being the only tool easily available to measure sentiment in the opaque subprime securities world.
In the last couple of weeks, its message has been dire, says Tett. 
Never mind the fact that the risky tranches of subprime-linked debt (the so-called BBB ABX series) have fallen 80 per cent since the start of the year; in a sense, such declines are only natural for risky assets in a credit storm.
Instead, what is really alarming is that the assets which were supposed to be ultra-safe — namely AAA and AA rated tranches of debt — have collapsed in value by 20 per cent and 50 per cent odd respectively.
That’s the ultra-safe stuff that was meant to, err, never lose its value.
Tett notes that audit industry, having lived through the Enron era scandals, is now terrified it could face lawsuits if it is perceived to be too lax towards its clients. Some outfits now appear to be demanding that their banking clients reprice their mortgage assets according to the only visible market tool — namely the ABX - rather than using models. Says Tett:
This new wave of fear is unlikely to vanish quickly. Call it, if you like, The 2007 Credit Crunch Story, Part II.
