Accrued Interest shares with us his thinking on why Ambac (NYSE: ABK), in particular, will be looking toward breaking up the monoline insurer. His mention that the challenges to such a move “would be numerous”, is putting it lightly. Litigators and securities lawyers across the country are licking their chops at yet another calamity from the subprime crisis. Too bad we can’t invest in them…
Welcome to the new Monoline Insurance News blog. In this blog I hope to stay on top of and track issues key to the monoline insurance industry and the municipal bond market. A monoline insurer is simple a company that guarantees payment of a bond principal and interest when a issuer defaults. Mostly known in municipal bond markets, many municipalities have used the monolines to decrease the percentage on their issue, increase the credit ranking (AA, AAA etc). Some of the earliest and greatest monoline insurance companies are now in trouble. Most notably, the first monline, Ambac Financial (NYSE: ABK) and the other industry elder MBIA Insurance (NYSE: MBI).
Since the monolines are so important to the municipal bond industry, in which many Americans find tax-free security in their portfolios, I hope to pay special attention to this issue. Also, of course, this tends to be on everyone’s minds at the moment.
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