Tim Travis
Long only, deep value, registered investment advisor, portfolio strategy

Ratings Improvement And Higher Interest Rates Should Propel Assured Guaranty Higher

In the midst of the Financial Crisis of 2008-2009, few industries were in the crosshairs quite like the Financial Guaranty industry. These companies provide insurance on both municipal bond issuances and various structured finance securities. It was the structured finance business that caused the problems as many of these securities were plagued with fraudulently underwritten and costly mortgage backed securities. Losses from these policies created a vicious cycle of ratings downgrades, requiring equity issuances at continuously lower stock prices, making for greater dilution. Since the bottom of the market in March of 2009, the many of the large bond insurers have successfully litigated against many of the mortgage bond issuers to recoup losses and rebuild their capital cushions. No bond...

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