Moody’s is having a look at the "AAA" rating carried by bond insurance firm MBIA (MBIA).
MarketWatch writes that "Bond insurers agree to pay principal and interest when due in a timely manner in the event of a default. It’s a $2.3 trillion business that offers a credit-rating boost to municipalities and other issuers that don’t have AAA ratings."
Unfortunately, MBIA and its peers have guaranteed a lot of paper for pools with subprime mortgages, and their stocks have reflected that with big drops.
It’s hard to a bond insurance company to insure a bond that does not have a "AAA" rating when the bond insurance firm does not have one itself.
Douglas A. McIntyre
Sponsored: Attention Savvy Investors: Speak to 3 Financial Experts – FREE
Ever wanted an extra set of eyes on an investment you’re considering? Now you can speak with up to 3 financial experts in your area for FREE. By simply
clicking here you can begin to match with financial professionals who can help guide you through the financial decisions you’re making. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Editors' Picks
