Assured Guaranty Ltd has insured $162 million of debt issued by Stockton.
The Nuveen analyst, in a report issued on Wednesday, said the insurer "has ample claims-paying resources to cover timely payment of interest and principal on the Stockton bonds it guarantees, and it has publicly affirmed it will pay, should that be required."
Citigroup on Thursday offered to pay 86 cents on the dollar for some insured Stockton issues, a trader familiar with the matter. But an independent pricing service, Bedford, Massachusetts-based Interactive Data, on Wednesday valued the issues at 93 cents on the dollar, according to the trader.
Spokesman for Citi and Interactive Data declined comment.
Before the credit crisis, more than half of new municipal bonds that came to market were backed by insurance. But ruinous bets on mortgage securities cost the insurance companies the top credit ratings investors demand, and their market share crumbled.
Some municipal experts are still cautious about the insurers' ability to fully repay interest and principal to bondholders if there is a default.
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