Bond Insurers

[HenryTo]

This continues to bear watching going forward:

http://www.bloomberg.com/apps/news?pid=20601109&sid=aOjl_Hy9ibBI&refer=exclusive

[rffrydr]

Fitch says MBIA cannot live without it (or, at least, certain financial pieces); MBIA says, ha, ha ha:

http://money.cnn.com/news/newsfeeds/articles/newstex/AFX-0013-23980868.htm

A game of chicken... interesting.
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

Moody's latest take on the bond insurers:
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Guarantor losses may be less than reported -Moody's
Tue Mar 11, 2008 5:18pm EDT

NEW YORK, March 11 (Reuters) - U.S. bond insurers' losses are likely much lower than what the troubled firms have reported when marking their holdings to market prices, Moody's Investors Service said on Tuesday.

Shares of bond insurers like MBIA Inc (MBI.N: Quote, Profile, Research) and Ambac Financial Group (ABK.N: Quote, Profile, Research), which guarantee payments on roughly $2.4 trillion of debt securities, have fallen precipitously on worries about billions of dollars of claims on mortgage-related bonds they may have to pay out.

In the last six months, Ambac shares have fallen 79.4 percent and MBIA shares have slid 81 percent.

But Moody's approach to rating the guarantors involves trying to determine the "real economic loss" the firms will sustain, as opposed to mark-to-market losses, Moody's analyst Ted Collins said in response to a question on a conference call.

Such loss estimates are "lower than the mark to market that's being recorded," Collins said.

Accounting firms are putting increasing pressure on financial firms to mark their holdings to observable market prices. That has frustrated some firms, which argue that volatile short-term prices can exaggerate actual losses.

If the losses the bond insurers face turn out to be less than expected, that could provide some relief for investors.

Insurers like Ambac have had to write down the value of billions of dollars of credit derivatives, but these write-downs may not necessarily translate into actual losses.

As a result, some players are still confident the firms have enough capital and available funds to pay expected claims.

However, mark-to-market losses could increase further, Collins said, and Moody's is monitoring this.

Moody's also said on the call that it will be some time before the agency gets better visibility into the ultimate stability of bond insurers' mortgage risk.For details on the Moody's call, see [ID:nWEN4425]. (Reporting by Neil Shah; Editing by Leslie Adler)

[rffrydr]

Wall St. can't afford this guy anymore:


http://www.latimes.com/news/nationworld/nation/la-na-spitzer11mar11,0,632692.story
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

MBIA telling Fitch they can leave it:

http://money.cnn.com/news/newsfeeds/articles/newstex/AFX-0013-23649413.htm
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Funny. I'd laugh if I wasn't crying.
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Today is the Tomorrow you worried about Yesterday!

[Rubedo]

http://bigpicture.typepad.com/comments/2008/03/rumour-of-secon.html

Rumour of Second Bail Out Rumour
Friday, March 07, 2008 | 11:00 AM
in Credit | Derivatives | Financial Press | Psychology/Sentiment

I love these comments, coming from a pair of clever traders in the UK:

Rumour of second bail out rumour coming in Ambac.

Word is that CNBC have heard from a source close to the fire escape that the Monolines are worried that there will be no new rumours about possible rescues around until the recent rescues are proved to have failed.

That means that there'll be no Friday evening prop for the stock markets.

A source close to the industry said that a consortium is "being put in place to work on new rumours but we can't be sure that these rumours will actually be ready for another five business days."

News of the rumoured rumour of salvation sent MBIA and AMBAC up .01% in pre-market trading. Hank Paulson was rumoured to be delighted with the patriotic rumours, a source close to him on his lifeboat off the coast of Hawaii said Thursday. Ben Bernake has placed pencils in his ears and is wearing his favourite underpants on his head.

-David McCreadie and Dan Davies

[rffrydr]

Fitch, who has little business in this business, spoils the rally:

http://www.reuters.com/article/gc06/idUSN0730781120080307
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

Looks like Ambac won't split after all:
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Ambac Split Avoided in Capital Plan
Wednesday March 5, 3:43 pm ET
Ambac Capital Plan Avoids Splitting Business

ALBANY, N.Y. (AP) -- New York insurance regulators say Ambac Financial Group Inc.'s plan to raise $1.5 billion in capital enables the company to stay in one piece. Ambac had considered splitting its operations.

The New York Insurance Department says the company's proposal to offer common stock and equity units to boost its reserves in an effort to maintain its "AAA" credit rating. The insurer essentially needs that rating to book new business.

The New York-based bond insurer said its total offering consists of a public stock offering for at least $1 billion and a $500 million offering of equity units. The company also said it plans to stop underwriting all structured finance businesses for six months to accumulate capital and will stop underwriting certain structured finance businesses.

[HenryTo]

The Ambac deal is certainly disappointing but as long as I am not a shareholder and as long as the rating agencies decide to retain their AAA rating, I am okay with it.

The fact that they couldn't come up with the capital is a little bit disconcerting but at this point, it makes all the sense in the world for the banks to retain as much capital as possible.

[HenryTo]

More details. It now looks like that the plan to split Ambac into two pieces is now back on the table:
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Report: Ambac Deal May Be Imminent
Wednesday March 5, 12:55 pm ET
By Michael Gormley, Associated Press Writer
Report: Ambac Bailout Announcement Could Be Imminent


ALBANY, N.Y. (AP) -- A bailout of bond insurer Ambac Financial Group Inc. is scheduled to be announced as early as Wednesday afternoon, according to a person close to the talks who spoke on the condition of anonymity because the deal was not final.


The deal would split Ambac's operations into a top-rated municipal bond business and a structured finance unit. Ambac is in trouble because the company wrote guarantees on billions of dollars of questionable structured finance assets.

The person who spoke on condition of anonymity said one of the details to be worked out with New York insurance regulators is when an announcement could be made without disrupting the markets. The announcement could be postponed until next week even if the deal is final. Ambac's troubles have sent stock prices plunging in recent months.

"A lot of progress has been made" in the last two days, the person said.

A second person familiar with the talks who also spoke on the condition of anonymity said the deal is final and would be announced shortly.

Ambac spokesman Douglas Renfield-Miller wouldn't comment on whether a deal was imminent, but said Wednesday the company is pursuing several options.

Ambac has been trying for several months to secure more capital to maintain its top AAA credit rating and continue operating as usual. Its protracted search for capital, and the problems of other bond insurers, has added to the anxiety on Wall Street and also caused problems in the municipal bond market.

The proposal to split Ambac into two divisions might have attracted capital from private equity funds and wealthy investors eager to gain exposure to the generally lucrative municipal bond insurance business. On the other hand, private investors seeking handsome double-digit returns would not have been likely buyers of a new company specializing in risky structured finance insurance.

New York state Superintendent of Insurance Eric Dinallo has been working on a solution for Ambac and its rival, MBIA Inc. MBIA also guarantees on billions of dollars of questionable structured finance assets. Ratings agencies Moody's Investors Service and Standard & Poor's Corp. said in past the insurers would need much higher capital levels to pay claims on defaults on the risky assets -- though they recently reaffirmed MBIA's ratings and said it did not need to raise more capital.

Ambac and MBIA, in efforts to hold onto their capital, said they would stop providing insurance on structured finance deals for at least the next six months.

[HenryTo]

Ambac trading halted.

[rffrydr]

Sold March AIG puts: this is it, no more longs. Next up sell EWZ--once more into the breach
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

Ambac decides not to split after all. In turn, this would mean that the Ambac liquidity injections will be enough to keep it AAA-rated, for now:

http://us.ft.com/ftgateway/superpage.ft?news_id=fto030320081848181710&referrer_id=yahoofinance

[HenryTo]

Third Avenue's latest 4Q 2007 letter to shareholders. Marty Whitman on MBIA:

http://www.thirdavenuefunds.com/taf/documents/shareholderletters/aboutus-letters-07Q4.pdf

[HenryTo]

The profits on his current short positions in MBIA/Ambac notwithstanding, Bill Ackman must - at this point - realize that he is fighting a losing game.

http://www.bankstocks.com/article.asp?type=1&id=9881657