Bond Insurer Cushions Adequate for Puerto Rico, S&P Says

Assured Guaranty Ltd. and MBIA Inc.’s municipal insurance unit are sufficiently capitalized for any losses on municipal debt from Puerto Rico and Detroit, according to Standard & Poor’s.

Assured has a capital cushion of $450 million to $500 million against exposure to Puerto Rico of $5.5 billion and MBIA’s National Public Finance Guarantee Corp. has $350 million to $400 million versus exposure of $5.3 billion, S&P credit analysts Marc Cohen and David Veno in New York wrote in a report dated today. That’s consistent with a BBB rating, or two steps above speculative grade, they wrote.

“We do not expect rating migration within the legacy bond insurers’ U.S. public finance portfolios or actual defaults that would result in any rating actions,” the analysts said in the report.

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