- S&P yesterday afternoon downgraded MBIA's (NYSE:MBI) municipal bond insurance unit by two notches to A from AA-. The move, says BTIG bull Mark Palmer, significantly diminishes National's ability to write new business, and thus boosts the chances that MBIA will look to sell itself.
- The natural buyer, says Palmer, is Assured Guaranty (NYSE:AGO), which has been clear about its intention to consolidate what's left of the monoline industry.
- He reiterates his Buy rating and $14 price target. That's 50% of adjusted book value, and nearly 60% upside for the stock.
- MBIA gained 4.6% yesterday, and Assured Guaranty 2.2%.