"Unit God," said the U.S. investment master Warren »Buffett said that on the 12th,'s Berkshire» Hathaway (Berkshire Hathaway) will be willing to three insurers underwriting of the bonds worth about 8000 100 million U.S. dollars of municipal bonds to provide reinsurance. This news eased the initial investors in the further deterioration in the credit market concerns.
Bond insurers facing huge claims
Buffett in the United States CNBC TV interview, said that Hathaway had three largest U.S. bond insurer Ambac, MBIA and FGIC proposed, is willing to their underwriting of municipal bonds to provide reinsurance, but does not include other complex high-risk Financial instruments.
Bond insurer's role is in bonds issued to lose the solvency of responsibility on their behalf. Since the outbreak of the crisis, loan and mortgage bonds Wei Yuelv continues to rise, bond insurers facing huge claims. The world's largest bond insurer MBIA Inc. announced that its 2007 fourth quarter in its history with the most serious single-quarter loss. Ambac, FGIC failed to keep the bond insurer crucial 3 A credit rating.
The United States and the municipal authorities usually only received the highest rating of the insurance business. With some insurers ratings decline, many municipal bond issuers choose to give up insurance. As a rating of only 3 A large reinsurers, Berkshire in helping to stabilize the highest ratings of municipal bonds, municipal bond insurance was boosted resale value is uniquely advantageous position. This professional reinsurance will also bring new areas of the capital. Over the years, bond mutual insurer has been providing reinsurance, as the bond insurer's overall loss increase, the market also secured by the value of the doubt.
Buffett disclosed that a body had rejected his proposal, he is waiting for the other two institutions answer. He said in an interview: "It seems they did not open the door to accept us." Buffett also said that he was prepared for these bonds the insurer 30 days time to find a better deal.
Real help or limited
The industry pointed out that Buffett's aid scheme seemingly timely help, but in fact, the insurers have little real meaning. Buffett is the re-insurance is limited to the major targets of insurers minimize the risk of default, the best quality assets - municipal bonds, and real hot potato - all kinds of high-risk structured finance tools (such as vouchers, and other unsecured claims ) Were excluded, there is no fundamentally solve the problems faced by insurers. At the same time, high-quality assets will be re-insurance, the remaining asset portfolio risk levels actually increase, insurers downward pressure on the ratings was not the slightest mitigation.
Paris banking transactions in U.S. interest rates Co-Head Nicholas »Beckman said that this is good news, the market breathed a sigh of relief. But I think some of the excessive market reaction, the real problem lies not in municipal bonds, but the structural financial products.
Assured Guaranty Ltd. Chief executive officer of Dominica » said that Buffett's proposal includes only the bond insurer in the municipal bond business, so Chouzou funds to the bond insurer will exceed the benefits . Assured Guaranty is a stability has been received 3 A rating of the bond insurer, to provide reinsurance to other insurers. said that if the bond insurer of municipal bond business will be transferred to the Buffett, will find that they need more funds, because by then their business will be a higher risk of over-reliance on the private debt market.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment