State Street Clipped by Bond Losses

State Street Corp., Boston, has $15 billion of low-yielding securities maturing this year that it plans to re-invest in AAA-rated mortgage- and asset-backed securities at higher yields "if government programs begin to normalize markets." The company's chief executive and chairman Ronald E. Logue mentioned the plans for possible MBS/ABS purchases in conjunction with projections for net interest income in 2009, which he said he expects to be flat compared to 2008. The company on Tuesday said "ongoing illiquidity in the markets" caused after-tax unrealized mark-to-market investment losses of $6.3 billion in 2008. It said that none of its securities are in default and all are current on principal and interest. In the fourth quarter, State Street's net income fell to $65 million from $223 million during the same period a year ago.