Credit Rating Firms Seen Holding Back on Bond Insurers

By Neil Shah - Analysis
Reuters January 30, 2008

EXCERPT

...Moody's Investors Service and Standard & Poor's have already given MBIA Inc and Ambac Financial Group, the two largest bond insurers, too much time to shore up their troubled balance sheets.

Janet Tavakoli, a structured finance analyst, points to the relatively quick rating actions on CapMAC, a monoline bond insurer that was eventually absorbed by MBIA in the late 1990s.

But with global investors nervous about the fate of the bond insurers and any ripple effects on the broader financial system, the stakes may now be too high.

"Everybody's looking for a constructive solution here," Tavakoli said. "It's in the interest of everybody in the capital markets to see something worked out that is reasonable."

(Additional reporting by Dan Wilchins in New York; editing by Clive McKeef)


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