BloggingStocks http://www.bloggingstocks.com BloggingStocks http://www.blogsmithmedia.com/http://www.bloggingstocks.com/media/feedlogo.gif BloggingStocks http://www.bloggingstocks.com en-us Copyright 2012 Weblogs, Inc. The contents of this feed are available for non-commercial use only. Blogsmith http://www.blogsmith.com/<![CDATA[Auction rates remain high as markets await word on bond insurers]]>http://www.bloggingstocks.com/2008/02/19/auction-rates-remain-high-as-markets-await-word-on-bond-insurers/http://www.bloggingstocks.com/2008/02/19/auction-rates-remain-high-as-markets-await-word-on-bond-insurers/http://www.bloggingstocks.com/2008/02/19/auction-rates-remain-high-as-markets-await-word-on-bond-insurers/#commentsFiled under: , ,

The University of Pittsburgh opted to buy back $92 million in bonds after market rates on some of its existing auction-rate debt topped 17% last week -- threatening to add $605,000 in weekly interest costs, The Wall Street Journal reported Tuesday (subscription required).

Further, the university said it may make offers to buy back almost $340 million more in debt, Bloomberg News reported Tuesday. Other good-credit institutions that have faced higher auction-market interest rates include The Port Authority of New York and New Jersey, Georgetown University and Carnegie Hall.

Auction-rate securities are long-term bonds that mimic short-term debt. Interest rates are reset in auctions held regularly, usually between seven and 35 days. Typically, municipalities, student-loan providers and museums, among others, use this type of instrument because it gives them a long-term credit source at short-term interest rates.

Jittery auction-rate market

However, these are not typical times for the credit markets. Auctions have failed when investors refused to buy the securities, and investment banks such as Citigroup (NYSE: C) and Goldman Sachs (NYSE: GS), already laden with unwanted debt and trying to rebuild their balance sheets, refused to provide capital to support the market.

Continue reading Auction rates remain high as markets await word on bond insurers

Auction rates remain high as markets await word on bond insurers originally appeared on BloggingStocks on Tue, 19 Feb 2008 15:20:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>ABKAmbacauction rate securitiesbond insurersbond marketCCitigroupcredit marketsGoldman SachsGSinterest ratesinthenewsMBIMBIAmortgage backed securitiesNew York State Department of InsuranceSpitzerTue, 19 Feb 2008 15:20:00 EST<![CDATA[Economists say auction-rate bond failures underscore need for MBIA, Ambac re-capitalization]]>http://www.bloggingstocks.com/2008/02/15/economists-say-auction-rate-bond-failures-underscore-need-for-mb/http://www.bloggingstocks.com/2008/02/15/economists-say-auction-rate-bond-failures-underscore-need-for-mb/http://www.bloggingstocks.com/2008/02/15/economists-say-auction-rate-bond-failures-underscore-need-for-mb/#commentsFiled under: ,

Amid calls for disclosure of more information on bidding for auction-rate bonds after dealers stopped buying the securities, two economists told BloggingStocks Friday that the problem of a lack of investor demand speaks directly to the need to re-capitalize bond insurers MBIA and Ambac.

"The problem is not merely a lack of demand for bonds. The problem is that institutional investors are shunning these investments because they are concerned about a lack of available insurance for this debt and related credit market uncertainty, which underscores the need to address the liquidity concerns of MBIA and Ambac," economist David H. Wang said Friday.

MBIA, Ambac: two linchpins

The bond insurers, Wang said, are two linchpins of the bond market [municipal, corporate], and, by extension, of the financial markets.

Shares of MBIA (NYSE: MBI) and Ambac (NYSE: ABK) have lost more than 70% of their value in the past six months, as investors have fled them amid concern that the two do not have sufficient capital to fund insurance policies for mortgage-backed and collateralized debt obligations held by banks and institutions. MBIA and Ambac executives have rejected the accusations, arguing that they have sufficient capital to fund claims and can modify/improve their business models, long-term, aided by re-capitalization. MBIA fell 80 cents to $11.82 and Ambac fell 45 cents to $10.08 in Friday afternoon trading.

Continue reading Economists say auction-rate bond failures underscore need for MBIA, Ambac re-capitalization

Economists say auction-rate bond failures underscore need for MBIA, Ambac re-capitalization originally appeared on BloggingStocks on Fri, 15 Feb 2008 14:50:00 EST. Please see our terms for use of feeds.

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