Muni market shrugs off insurance problems
As I mentioned yesterday, the largest insurers of municipal bonds, MBIA Inc. (Symbol: MBI) and Ambac Financial Group Inc. (ABK), were hit right where it hurts by Standard & Poor’s. The rating agency said yesterday it had put a “negative outlook” on the two firms’ AAA rating. Hundreds and hundreds of billions of dollars worth of muni bonds are considered AAA because the issuers paid to have MBIA or Ambac back up the payments in case of a default. If the bond insurers are eventually downgraded, so too are the bonds they backed.
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