The correction in the US mortgage market and the accompanying adjustment of risk pricing has reverberated far and wide throughout the global capital markets, says a Standard & Poor''s Ratings Services report titled, A Sub prime Hangover: Credit And Liquidity Concerns Cloud The Broader US Mortgage Market.

"Simply put, risk aversion in the mortgage capital markets remains at an all-time high, concern for the potential impact on other asset classes has escalated, and the resulting liquidity crunch is affecting the pricing of all credit, not just mortgages and MBS," said Standard & Poor''s credit analyst Victoria Wagner.

According to the report, this current credit cycle is one of the most challenging financial institutions have ever faced. Until credit spreads and asset pricing fully recalibrate, mortgage liquidity will be constrained.

Rating actions, if appropriate, will depend on the size and nature of the losses, the permanency of these losses, and their impact on capital and future earnings.