S&P says market reaction to Bear outlook overdone
NEW YORK (Reuters) - The market's response to a recent change in Bear Stearns' BSC.N credit rating outlook has been a "vast overreaction," an analyst at Standard & Poor's said on Monday.
S&P lowered its outlook on Bear to negative from stable on Friday, indicating a rating downgrade is possible over the next few years. The move prompted Bear's stock price to plunge.
"Not that much has changed at the company to warrant such a severe change in the pricing of their securities in our view," S&P analyst Scott Sprinzen said.
Shares of Bear Stearns, known on Wall Street as a leader in the $7 trillion U.S. mortgage bond market, dropped 5.9 percent to $108.85 around midday on Friday, and the cost of protecting its debt with credit derivatives jumped nearly 40 percent.
Bear's stock price was up more than 5 percent on Monday at
$113.81.
"We still expect the company to be profitable in the current quarter and thereafter," S&P's Sprinzen said. "Its liquidity is strong."
