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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (73584)	1/16/2008 5:34:04 PM
From: RealMuLan	Read Replies (1) \| Respond to of 116555

MBIA's Capital Need Grows, Credit-Default Swaps Show (Update2) By Shannon D. Harrington bloomberg.com Jan. 16 (Bloomberg) -- The worst may still be ahead for the world's biggest financial companies, trading in credit-default swaps shows. Prices for contracts tied to the bonds of MBIA Inc., Bear Stearns Cos. and Washington Mutual Inc., which protect lenders and creditors against the possibility that debt payments won't be made, are higher for one year than for five, according to data compiled by Bloomberg. Longer-term protection is usually more expensive because the risk of nonpayment is greater. It still costs more to take out insurance against default for one year even after New York-based Citigroup Inc., the largest U.S. bank, obtained $14.5 billion yesterday to shore up depleted capital. Lenders hold more than $200 billion of bonds and loans used to finance leveraged buyouts that they can't sell and are falling in value, based on data compiled by JPMorgan Chase & Co. ``It's very dangerous for some of these big institutions,'' said Doug Noland, a credit analyst in Dallas at David W. Tice & Associates. The firm's $924 million Prudent Bear Fund has returned 23 percent in the past year. ``We're going into an acute liquidity crisis for corporate borrowers.'' Most of the so-called inverted credit curves are concentrated in securities firms, banks and bond insurers that reported more than $100 billion in losses on mortgages to borrowers with poor credit. New York-based Moody's Investors Service last week predicted corporate defaults for all companies would rise fivefold this year as the economy slows. No Security ...