US Mortgage Liquidity Crisis Spreading to Private Equity

by: Mark McQueen

If you are trying to track your own lenders’ involvement (or the lender to your lender) in the subprime market, here are some helpful stats from Marketwatch (via Calculated Risk):

Top U.S. Subprime Mortgage Lenders

Rank/Lender/Location/Q4 2006 originations, in U.S. billions

1 HSBC Finance (NYSE:HSBC) Prospect Heights, IL $12.3
2 New Century Financial (PINK:NEWC.PK) Irvine, CA $12.2
3 Countrywide Financial Calabasas, CA $10.1
4 WMC Mortgage (NYSE:GE) Burbank, CA $9.0
5 First Franklin (Merrill Lynch) (ML) San Jose, CA $7.8
6 Wells Fargo (NYSE:WFC) Home Mortgage San Francisco, CA $7.4
7 Option One (H&R Block) (NYSE:HRB) Irvine, CA $6.1
8 Fremont Investment & Loan* Santa Monica, CA (FMT) $6.0
9 Washington Mutual* ((NYSE:WM) Seattle, WA $5.7
10 CitiFinancial (Citigroup) (NYSE:C)* Baltimore, MD $5.0

It isn’t a certainty, but what are the chances that corporate credit (or the credit offered to BDCs and specialty finance companies that borrow heavily and then relend to corporates themselves) is going to become more accessible over the coming months at the firms above?

Just yesterday, in fact, a private equity shop principal mentioned that the credit market was already causing them some concerns as they look for financing on a current large U.S.-based deal that they’ve got under a LOI.

Has the tightening already begun? Time will tell.