MBIA Bonds Fall, Ambac Next?
Ambac today said it will raise more than $1 billion through the sale of shares and convertible stock.
Ambac and other guarantors are forced to add more capital to protect against losses as the credit quality of the securities it guarantees declines.
Jan 11th, MBIA sold $1 billion of surplus notes to keep its AAA rating, the AA rated debt fell as low as 88.5 cents on the dollar today.
MBIA's 25 year hybrid bonds pay a fixed rate until 2013, when, if not called, they will begin to float.
Surplus notes are bonds issued by insurance companies that state insurance regulators consider equity.
The debt, which is an obligation of MBIA Insurance Corp., ranks behind all other claims.
At 88.5 cents on the dollar, the yield to the call date is about 18%. Now that's a risk premium. Hattip to Bloomberg.
Ambac and other guarantors are forced to add more capital to protect against losses as the credit quality of the securities it guarantees declines.
Jan 11th, MBIA sold $1 billion of surplus notes to keep its AAA rating, the AA rated debt fell as low as 88.5 cents on the dollar today.
MBIA's 25 year hybrid bonds pay a fixed rate until 2013, when, if not called, they will begin to float.
Surplus notes are bonds issued by insurance companies that state insurance regulators consider equity.
The debt, which is an obligation of MBIA Insurance Corp., ranks behind all other claims.
At 88.5 cents on the dollar, the yield to the call date is about 18%. Now that's a risk premium. Hattip to Bloomberg.
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