S&P downgrades Ambac, MBIA
Another day, another selloff for Ambac (ABK) and MBIA (MBI). The bond insurers sold off anew Thursday afternoon after S&P cut its insurer financial strength ratings on the companies’ main insurance units to double-A from triple-A. The news came a day after Moody’s said a downgrade of Ambac and MBIA was “likely.” Shares fell more than 6% after dropping more than 15% Wednesday.
“The rating actions on the companies reflect our belief that these entities will face diminished public finance and structured finance new business flow and declining financial flexibility,” S&P wrote. “In addition, we believe continuing deterioration in key areas of the U.S. residential mortgage sector
and related CDO structures will place increasing pressure on capital adequacy. The ‘AA’ financial strength ratings of these companies are supported by currently sound claims paying ability and liquidity levels in our opinion.”
On Wednesday, the companies responded to Moody’s review announcement within minutes, with Ambac pronouncing itself “disappointed” and MBIA saying it “disagreed.” Presumably we can expect more of the same this afternoon.
If you can look past present numbers and think long term, it is probably time to start planning when to buy more BAC stock. I am.
This is a possibly a great discount for long-term success. Especially if they keep the dividend in tact.
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Have your head examined, dude!