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’It’s official: Ambac’s CDS triggered
It’s the event Ambac thought would never, ever come:
The International Swaps and Derivatives Association, Inc. (ISDA) announced that its Americas Credit Derivatives Determinations Committee resolved that a bankruptcy credit event has occurred in respect of Ambac Assurance Corporation,
Bond insurer death watch, FGIC edition
According to the investor relations section of the website of FGIC, the bond insurer part-owned by PMI Group and Blackstone:
FGIC provides irrevocable and unconditional guaranty of timely payment of principal and interest on the securities it insures.
The travails of the financial guarantors
There’s been a slew of (mostly negative) ratings actions on the financial guaranty sector – the bond insurers, mortgage insurers and the like – recently. Here’s a recap.
Subsequent to a warning from FGIC’s auditor that there is substantial doubt over the bond insurer’s ability to “continue as a going concern,”
Moody’s downgrades FGIC to Caa1
At Caa1, Moody’s has knocked FGIC down to seven notches below junk – and the outlook for the company is negative. What’s next? D(efault)?
From the statement, emphasis FT Alphaville’s:
Moody’s Investors Service has downgraded to Caa1,
The death throes of the bond insurers
Ambac’s share price hit an all-time low on Wednesday, falling below $1 a share for the first time in the company’s history as a public company.
Why? A rather savage downgrade from S&P, which cut the bond insurer’s financial strength rating to A from AA,
Museum sues FGIC over ‘worthless’ bond insurance
And so the sad saga of the bond insurers continues, as this report from Bloomberg demonstrates:
Financial Guaranty Insurance Co. was sued by the Los Angeles County Museum of Art, which said insurance it bought on $200 million of municipal bonds became “worthless” when Fitch downgraded FGIC’s debt rating.
Monoline Re
From MBIA:
(BUSINESS WIRE)–MBIA Inc. (NYSE: MBI – News) today announced that its insurance subsidiary, MBIA Insurance Corporation (MBIA), has agreed to reinsure a portfolio of U.S. public finance bonds (the “public finance portfolio”) insured by Financial Guaranty Insurance Company (FGIC) with total net par outstanding estimated to be approximately $184 billion as of September 30,
Les menaces monolines
Unfortunate news for Belgian-French bank Dexia today as monoline FSA draws down on a $5bn credit line.
Such is the power of Ackman.
But there’s monoline pain elsewhere in francophone Europe. Take Credit Agricole.
Bond insurers seek to wipe out contracts
Bond insurers such as Ambac, MBIA and FGIC are talking to banks about wiping out $125bn of insurance on risky debt securities, in what could be the only way to limit the financial damage surrounding the so-called monolines.
Moody’s junks FGIC
PRESS RELEASE: Moody’s Cuts Fgic’s Rtg To B1; Outlook-Neg
New York, June 20, 2008 — Moody’s Investors Service has downgraded to B1, from Baa3, the insurance financial strength (IFS) ratings of the main operating subsidiaries of FGIC Corporation,
Bond insurers’ ratings slashed – again
It wouldn’t be a Friday afternoon unless the ratings agencies came out with a spate of downgrades, and today was no exception as S&P continued its bonfire of the bond insurers:
First up, XL Capital and XL Financial:
Throwing good money after bad
Here’s a reason why you wouldn’t want to bailout a monoline:
Given the current amount of severe stress facing many of the monoline financial guarantors, it is extremely unlikely that all stakeholders will be made whole.
Dinallo warns on FGIC woes
The US regulator overseeing efforts to prop up FGIC said the troubled bond insurer should come up with fresh capital in “the next 30 days” to avoid worst-case scenarios such as closing down. Eric Dinallo,
S&P cuts FGIC rating to junk
The challenges facing FGIC deepened after S&P cut the troubled US bond insurer’s rating into junk territory and said the insurance provided by FGIC was now in effect worthless. S&P cut FGIC’s insurance rating by six notches on Friday from A to BB,
Settlement risk: ISDA’s CDS monoline lists
The International Swaps and Derivatives Association has made some lists – specifically lists of all the CDS contracts out there which reference a monoline. Simply, all the “insurance” contracts on say,
FGIC sues IKB over $1.9bn liabilities
The fallout from the credit crisis spread Monday when Financial Guaranty Insurance Company, the US bond insurer, filed a lawsuit accusing IKB, the German bank, and its affiliates of a fraud that left it exposed to potential liabilities of $1.9bn.
Blackstone and the bond insurers
Since when has Blackstone been advising ACA?
Well they are now. The troubled monoline bond insurer on Tuesday night said it had entered into a third forbearance agreement with its counterparties to give it more time to raise capital and restructure before it has to post collateral on its CDS positions.
What about the baddies in a bond insurer split?
Can it ever be so simple as the goodies and the baddies?
On the one hand, the latest Dinallo-inspired plan to save the bond insurers (or at least part of them) seems to be gathering steam. First FGIC was considering the much-heralded “good bank/bad bank”
Ambac in talks over break-up
Ambac Financial Group, the troubled US bond insurer, is in discussions to effectively split itself up in a move aimed at ensuring that municipal bonds backed by Ambac retain high credit ratings, reports the Wall Street Journal,
FGIC’s breakup: saving Main Street at the expense of Wall Street
Bond insurers: Eric Dinallo cometh.
The New York insurance superintendent Eric Dinallo has just been speaking to CNBC – the news outlet of choice for pre-weekend monoline news. Says Dinallo, FGIC – which lost its last triple-A rating on Thursday – wants to split itself up:
When Dinallo met Buffett: the monoline breakup plan
Bond insurer MBIA hit back on Thursday at Pershing Square’s Bill Ackman – the hedge fund manager who has made a fortune shorting the monolines. Outsiders seem to be finding value in the bond insurer business too.
Spitzer hands monolines a five day deadline
New York governor Eliot Spitzer has given monoline bond insurers up to five business days to find fresh capital, or face a potential break-up by state regulators who want to safeguard the municipal bond markets.
Buffett steps into the monoline crisis
Warren Buffett’s mischievous intervention in the monoline crisis has put Wall St banks under fresh – and very public – pressure to come up with a viable rescue plan for these specialist bond insurers.
Berkshire Hathaway offers monolines $800bn bond reinsurance
Warren Buffett has just told CNBC that Berkshire Hathaway has offered to reinsure $800bn of muni bonds insured by monolines Ambac, MBIA and FGIC.
But one monoline has already turned him down.
Crucially,
Monoline update: hedge funds the only people who know what they’re doing
Perhaps a little perspective is needed, bond insurer-wise.
Markets don’t seem to know how to react. It’s pretty clear that as far as trading monolines goes, equity investors are in hock to whatever the latest headline is.
S&P warns banks on monolines
Standard & Poor’s, the credit rating agency that is considering downgrading the triple-A credit ratings of bond insurers, warned Tuesday that the move could be damaging for banks with direct exposure to the insurers.
Monoline losses ‘only’ $5bn-$7bn
Financial institutions are likely to take only around $5bn to $7bn in losses from their exposure to bond insurers, far below recent estimates of as much as $70bn, Morgan Stanley said Monday, reports Reuters.
Monoline update: S&P downgrades FGIC, MBIA on watch
Standard & Poor’s joined Fitch on Thursday in downgrading FGIC, the world’s fourth-largest bond insurer, or monoline.
Going a step further, they’ve now also put MBIA on negative rating watch – regarded by many as a signal for an all but inevitable downgrade on Friday or early next week.
MBIA: Another morning, another monoline crisis…
Rate cuts or no rate cuts, the news just keeps getting worse for the big bond insurers, or monolines. On Thursday morning, or rather, just after midnight US eastern time, MBIA, the world’s largest bond insurer,
Thain doubts monoline bailout
John Thain, Merrill Lynch’s new chief executive, said he expected individual credit insurers would receive capital infusions from investors, but that it would be difficult to craft an “industry-wide” bailout for the beleaguered guarantors.