Skip navigation
Watchlist Sponsored By :


Current DateTime: 07:29:58 09 Nov 2009
LinksList Documentid: 24355697

Current DateTime: 07:29:58 09 Nov 2009
LinksList Documentid: 24890560
  • Winterizing Your Portfolio

      If 2009 was the winter of our discontent, will 2010 be a winter wonderland for investors? A lot depends on the recovery—or lack thereof.

  • Investor's Guide to Real Estate

      Some even say the long-awaited recovery is here. Regardless, buyers and sellers alike can profit from our guide.

  • Alternative Investing

      Stocks and bonds? Sure. But it's a big world out there for investors.

powered by digg
Bond Insurers Face Downgrade Despite Call for Delay
By: Charlie Gasparino,, On-Air Editor | 30 Jan 2008 | 03:40 PM ET
Text Size

Wall Street bond rating agencies are poised to downgrade two big bond insurers, Ambac Financial Group and MBIA, even though New York state insurance regulars would like to get a postponement until the state can develop a bailout package, CNBC has learned.

Losing a Triple A rating could be devastating for the bond insurers, preventing them from drumming up new clients -- and possibly forcing them out of business.

Barring some last minute agreement on a bailout package, the downgrades could come as early as today.

Insurer Ambac [ABK  Loading...      ()   ] has received a downgrade from rating agency Fitch, but has so far been spared by Standard & Poor's and Moody's. MBIA [MBI  Loading...      ()   ] hasn't been downgraded.

The ratings agencies realize they're walking a tight rope -- if they downgrade the insurers, they could expedite their demise. On the other hand, if they follow New York's request and don't downgrade, they're in essence violating their duty to downgrade bonds on objective criteria.

Moody's downplayed the likelihood of striking a deal with New York, however. A spokesman for the ratings agency confirmed that Moody's has had conversations with the Insurance Department, but said "we don't forbear on our ratings" based on talks with government officials.

Standard & Poor's had no comment.

The New York State Insurance Department has hired Perella Weinberg Partners to advise on developing a bailout of the bond insurers, a spokesman for the department said on Monday.

As CNBC reported last week, banks that met with Insurance Superintendent Eric Dinallo asked him to hire an outside financial advisor.

Sources told CNBC that New York is considering one of two approach as a bailout plan: either a line of credit that bond insurers could tap as needed, or a deal that would deal with each insurer on an individual basis.

Bond insurers, who guarantee more than $2 trillion of securities, have suffered write-downs of bonds and derivatives linked to subprime mortgages. The losses are big enough to potentially trigger ratings downgrades, forcing some investors to sell securities guaranteed by the bond insurers.

Last week, New York State Insurance Superintendent Eric Dinallo met with banks to encourage them to put up cash to support bond insurers.

Perella Weinberg is looking at ways to protect policyholders of the major bond insurers.

Besides Ambac, another major insurer is

- Reuters contributed to this report.

© 2009 CNBC.com
Tools:
Print EmailAdd This share icon
  • digg share

CNBC HIGHLIGHTS

  • Do free market libertarians really believe what they say about ethics and shareholder value? The Big Money takes a look.
  • Jim Cramer
  • Cramer did the research and found eight stocks that lead the pack. Read on to get his top picks.
  • On the anniversary of the fall of the Berlin Wall, many in the former Eastern Bloc recall communism fondly.
  • Gavel
  • Software, biotech firms, even banks are watching a particular Supreme Court argument today.
  • From politicians to CEOs to companies, here's your chance to vote for the winners and losers of 2009.
  • A new sinister Internet viruses can turn you into an unsuspecting collector of child pornography.
ADD COMMENTS
Remaining characters


Current DateTime: 03:21:08 09 Nov 2009
LinksList Documentid: 29778428

Current DateTime: 08:52:06 09 Nov 2009
LinksList Documentid: 29779196

Current DateTime: 06:53:35 09 Nov 2009
LinksList Documentid: 29779199

Current DateTime: 08:52:07 09 Nov 2009
LinksList Documentid: 29779198
  Data is a real-time snapshot  *Data is delayed at least 15 minutes
Global Business and Financial News, Stock Quotes, and Market Data and Analysis

© 2009 CNBC, Inc.  All Rights Reserved.
A Division of NBC Universal
Thomson ReutersThomson Reuters