Merrill Mexico Withstands Parent Turmoil

Rating agencies have affirmed their view of Merrill Lynch Mexico, despite monster losses at the parent. Fitch cut Merrill Lynch and its subsidiaries and kept it on negative outlook following revised earnings for third quarter 2007. “The size of trading losses and unrealized losses unexpectedly overwhelmed the performance of the consolidated firm,” says the agency. “The size of Merrill Lynch’s CDO position and subsequent loss reveal deficiencies in risk management. Fitch anticipates liquidity and pricing challenges to prevail in the market over the intermediate term potentially resulting in lower revenues (in select products/services), investment write-downs and/or fewer principal trading opportunities,” it adds. It affirmed a Triple A long-term senior rating, with a stable outlook, on Merrill Lynch Mexico, Casa de Bolsa. S&P also affirmed a Triple A and says the loss will not impact.