It seems likely that losses from monoline exposure could impact second quarter earnings by nearly $10 billion, nearly doubly the previous loss amount. The hardest hit among financial companies will likely be Citigroup (NYSE: C), Merrill Lynch (NYSE: MER), and UBS (NYSE: UBS). Such is the latest from Meredith Whitney from Oppenheimer. It is likely that Citigroup will post another loss, perhaps has high as $.50 per share, compared to previously expected quarter in the black.
Take a look at the 1-week return for the monoline insurers and some select municipal bond exchange traded funds (ETFs).
Ambac Financial (NYSE: ABK) +4.01%
MBIA Inc. (NYSE: MBI) +6.49%
Note: Both equity listings for the main monoline insurance companies are up, but faced a rough end of the week.
Muni bond ETFs:
Nuveen Insured Premium Income II (NYSE: NPX) -2.36%
Nuveen Investment Quality Municipal Fund (NYSE: NQM) -0.37%
Lehman Municipal Bond (AMEX: TFI) -3.92%
Blackrock Long Term Municipal Advantage (NYSE: BTA) -6.63%
Australia and New Zealand Banking Group Ltd (ANZ), Australia’s 3rd largest lender, noted it may see a $200 million write down thanks to its interest in a US bond insurer. The bank shares are seeing a significant decline currently, faltering nearly 6 percent. ANZs announcement further delineates the ripple effects of bond insurer uncertainty across the globe, not just in the United States and not just in municipal bonds.