Research Zeitgeist: Top Posts and Hot Topics
With the monoline bond insurers teetering on the brink, it’s hardly suprising that they were the hot topic among visitors to Research Recap during the latest week.
The most-read post by far was Standard & Poor’s warning that Bond Insurer Downgrades Could Lead to Bank Downgrades. Since that post, Moody’s has downgraded SCA’s XL Capital Assurance from Aaa to A3.
Deutsche Bank Chief Executive Officer Josef Ackermann told Bloomberg that ratings downgrades for bond insurers pose risks that could match the U.S. subprime market collapse.
It could be a tsunami-like event comparable to subprime.
The Economist points out that “if the insurers get derated (or worse still, go bust) … there could be a vicious spiral, since some investors are only allowed to own AAA-rated bonds; they will be forced sellers.”
In a more positive development, leading bond insurer MBIA raised $1 billion in equity in an effort to stave off cuts to its triple A credit ratings, the Financial Times reports.
The plans, underwritten by JPMorgan and Lehman Brothers and with a backstop from private equity group Warburg Pincus, were announced on Wednesday as MBIA said it had increased its after-tax operating loss for the quarter ending in December by $65m to $472.8m.
As efforts to prop up MBIA, Ambac and other insurers continue, PIMCO’s Bill Gross says bailouts are merely short-term palliatives for monolines and won’t remedy the real problem. In a Comment published in the FT, Gross writes: “The Ambac business model is as faulty now as was chairman Charles Wilson’s forecast for General Motors more than a half century ago.”
Visitors continue to look to Research Recap for background on this and related topics, as evidenced by the continuing poularity of primers on Credit Default Swaps and Structured Investment Vehicles.
Other topics bubbling up include comScore’s Politics, Women’s Internet Sites Fastest Growing in 2007 and CERA’s projection that Clean Energy Could Provide 16% of World Needs by 2030.
You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
