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Strategies & Market Trends : Ride the Tiger with CD

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To: koan who wrote (103602)	1/20/2008 10:40:05 AM
From: TheSlowLane	Read Replies (1) of 312826

Bond-insurer woes may trigger more write-downs Doubts on AAA ratings for Ambac, MBIA spark turmoil in muni bond market By Alistair Barr, MarketWatch Last update: 6:08 p.m. EST Jan. 18, 2008 SAN FRANCISCO (MarketWatch) -- Just when you thought it was over, trouble in the $2.3 trillion bond-insurance business could trigger another wave of big write-downs from banks and brokerage firms, experts said Friday. Leading bond insurers Ambac Financial (ABK) and MBIA Inc. (MBI) look increasingly likely to lose their AAA ratings. While almost unthinkable just six months ago, such concerns are also causing turmoil in the $2.5 trillion municipal-bond market. Bond insurers agree to pay principal and interest when due in a timely manner in the event of a default -- a $2.3 trillion business that offers a credit-rating boost to municipalities and other issuers that don't have AAA ratings. Without those top ratings, their business models may be imperiled. A more worrying consideration is that when a bond insurer is downgraded, all the securities it has guaranteed are, in theory, downgraded as well. Full story: marketwatch.com

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