Bankruptcy

A Quick Review of MBIA and Ambac

By J. Michael McBride

These two bond insurers have had a rough time and now are in the aftermath of being downgraded by the large credit agencies. Specifically, Moody's downgraded MBIA in mid June from AAA to A2. Other agencies had also taken similar action. However, what is interesting is that investors had already "voiced" their opinion by the time of the downgrade such that the company's share prices had fallen significantly prior to the downgrade. The company's stock has a 52 week high of $68.89 and it currently trades for $3.90!

The downgrade of these companies also causes a ripple effect on the debt insured by these companies. Certainly their failure would have an incalculable impact on the US company.

Michael

Full post as published by Texas Lawyer Blog on July 14, 2008 (boomark / email).