Research Zeitgeist: Top Posts and Hot Topics
Monoline bond insurers may have been bumped of the front page by Bear Stearns and the like, but the issues that plague them have not gone away.
Fitch this week downgraded FGIC and SCA’s XL Capital Assurance to junk status, and CreditSights warned that FGIC was on the brink of regulatory intervention; “To sum it up, FGIC is in a materially worse situation that we had previously believed. Barring a bailout or significant capital injection, the company is at material risk of being seized by regulators.”
As the Financial Times reports, the biggest bond insurers, Ambac (NYSE: ABK) and MBIA, (NYSE: MBI) are temporarily off the hook after their crucial triple-A credit ratings were recently confirmed. Yet “the markets are still not certain that even these big fish will be able to hang on to their top ratings.”
Still, in Research Recap’s most popular post of the week, Fitch asserted that the monolines’ problems should not have much negative impact on the assets they are guaranteeing in Europe and Asia.
Speaking of Europe, the next most-read post was the CreditSights outlook for write-downs at European banks, which have taken widely divergent approaches to valuing their risky assets.
And in an environment looking for other shoes to drop, CreditSights also scored with its report noting that credit card delinquencies are rising more rapidly than normal given unemployment trends. An earlier report from Fitch found that unemployment would need to quadruple before affecting highly rated credit-card backed paper.
Visitors to Research recap are also paying atttention to warning signs such as Standard & Poor’s latest ranking of potential “fallen angels” - prominent debt- challenged companies, headed by Sprint Nextel.
And finally, it’s nice to see strong interest in long-range research such as the Federal Government’s priorities for manufacturing R&D: Hydrogen fuel and Nanotechnology.
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