Thursday, June 05, 2008

S&P to Moody's: Well, I wasn't gonna let you get all the credit

S&P just downgraded Ambac and MBIA out of nowhere. Both now AA. Its hilarious how much the two ratings agencies parrot each other.

Here is the CDS story (all bid sides)...

Ambac Inc. 33 points (Opened @ 31)
Ambac Insurance 28 points (Opened @ 25)

MBIA Inc. 27 points (Opened @ 25)
MBIA Insurance 25.5 points (Opened @23.5)

Somehow MBIA's stock is actually up a couple pennies as I see it tick by. Stock market overall couldn't care less.

Also Lehman CDS is gapping in, about 50bps tighter right now.

5 comments:

Anonymous said...

Something fishy is in the air. Dow up 200+ on shaky retails news, oil up $5+, and Ambac & MBIA downgraded. All on a day before the employment reports. Hmmmm....

Hulu

Accrued Interest said...

Not that I like the stock market here, but having Lehman looking stronger is worth more than oil or monolines. VIX down 2 points was important for a lot of technicals.

There is no kabal. At least not on this blog.

Dave M. said...

Ok, so now that MBIA and Ambac are now at AA, how do munis bonds insured by them compare to bonds insured by Radian, which are also AA. My 5% GO's are almost back to their former prices, (if you can believe that matrix pricing, ugh!) but my sub 5% coupon munis are still down quite a bit. Can you help? Thanks. Always a great blog.

Anonymous said...

"I received a note today putting exposure within the banks at $600 billion. Barclay’s is estimating losses of $143 billion on a markdown—I think Moody’s has to follow suit for it to kick in at that level—UBS puts it at $203 billion, and Oppenheimer says Citi, Merrill, and UBS will write down somewhere between $40 and 70 billion among the three of them—a wide spread, I agree."

http://www.nakedcapitalism.com/2008/06/early-estimates-of-losses-from-mbia.html

So, we're waiting for Moody's next move to see the real effect of S&P downgrade? This is all too confusing!!!

Hulu

Accrued Interest said...

Several brokers (banks too maybe but I can only remember brokerages) have already written down some monoline exposure. If they are actually following accounting rules correctly, they should have already written down this stuff a fair amount.

See, they are supposed to mark-to-market their ABS/CDOs, right? The market has already severely discounted the value of monoline insurance. I'm going to write a quick note on this in a minute.