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Assured Guaranty Ltd. Message Board

  • domsam100 domsam100 Jul 7, 2009 10:42 AM Flag

    FSA Bond Prices In Free Fall

    Apparently the delisting announcement scared the bondholders into panic selling their FSA bonds.

    I do not know if the AGO management considered the bad consequences of their delisting announcement on the bond prices.

    Q: Would the FSA bonds be marginable after the delisting?

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    • Tony- added 2000 more shares this AM. In my book buying A rated securities with junk bond yields is a great long term play. As to the dreaded pink sheets- why would I want to get rid of an A rated bond yielding 14-15%- they are not for sale. My dry powder is gettinga little thin and prudence dictates I desist for a while.I have absolutely no idea where these will trade or when they will bottom but sooner or later folks will tire of giving their bonds away.Panic is not a rational thought process and often leads to buying opps- I think it has here at least for those of us who plan to hold these for years.
      I am not a regular poster- only do so when something extraordinary happens to get the views of other investors so I am out of here. I hope you and yor wife get to Paris one day- my wife would have had me under th Eiffel Tower the nexy day. Travel while you are healthy and still can is my best advice. Enjoyed your posts as well as others. RRW

    • Thanks Tony.

      I also did not find any reference to listing the bonds while quickly reading FSB prospectus.

      I am providing the links to the prospectuses so that others can read and find any clause related to listing.


      Prospectus for FSB
      http://www.sec.gov/Archives/edgar/data/913357/0000912057-01-543206.txt

      Prospectus for FSE
      http://www.sec.gov/Archives/edgar/data/913357/000104746902004257/a2094714z424b5.htm

      Prospectus for FSF
      http://www.sec.gov/Archives/edgar/data/913357/000104746903024664/a2115023z424b5.htm

    • I looked at the prospectus and saw no statement regarding the mandatory listing of the security. I'm not a lawyer, but the person in Investor Relations that I talked to said something about a window of opportunity AGO had to do delist.

    • Neither broker I deal with will accept a market order in the pink sheets probably for the very reasons you enumerate. There is some Board diversity of opinion on how liquid trading in these will be in the pink sheets however, I am prepared to assume the worst. Having done that I am not willing to give up yields of 14-15% and possibly even higher on A rated bonds. There is no way I could replace the income for what I paid for FSE and FSF.It would cost a good deal more to get the same amount and quality of income.Heck if you can steal these in the pink sheets I will probably try to steal some more too.

      So I have accepted the fact these will probably be highly illiquid and I will just hold them for life if necessary and enjoy the money.I run the risk that their business may deteriorate which is always possible- remember MBIA and AMBAC used to be thought of as impregnable and if I sell for that reason I stand to get hurt. However I think AGO showed great skill in avoiding the traps into which those two fell. Additionally with Ross on board they have a fresh source of capital. So I am going to bet they make it in good shape at least for the next several years. Hell these things will pay for themselves fairly quickly if you hold- so that's what I am determined to do not give them away and the pinkies therefore do not push my panic button like they have some sellers who cherish liquidity.

      The one thing I know about all this was that management acted in a completely disgusting manner in doing this and had to know in advance these would be sold off violently. These are owned mainly by small investors who are easy to panic and then run over. I feel there were ulterior motives in doing this despite company denials. Somebody will be picking these up for a song- probably people who know their true worth- there was no good reason to cut the small bondholders throats- $430 million of deeply discounted A rated bonds are a tempting target for greed but I don't want to play the game other than cashing the checks. As long as the money is paid on schedule I can deal with paper losses.RRW

    • Do the prospectuses for FSB, FSE and FSF say that they will be listed on the NYSE?

    • it is justified, try trading on the pinks, many brokerage houses won't trade there and if you do trade there, plan to place a market order and bend over. If the stock is fairly active, its not so bad, but if it isn't like these bonds, you will most likely get killed, plus even though they are good bonds, no one is looking at the pinks, AGO screwed everyone real good on this deal.

    • >>I have avoided the Pink Sheets like the plague- maybe that was not completely justified<<

      For those of us still standing, it will be a journey...one step at a time. I guess my mission will be to find a house that can convince me they can get the "best" numbers or at least volume (participation)and transfer my shares there if that's what it takes to manage them!!

    • I appreciate the info on the pink sheets.It isn't the NYSE but may not be the wild west show of old. Some of the panic may be unjustified as I am sure some of it is caused by fear of the pinks.Other than TSE stocks where the bid-asked are fairly reliable I have avoided the Pink Sheets like the plague- maybe that was not completely justified. RRW

    • thanks in advance, that's great.

    • FX Trader said....

      "no, the point is that trading volumes and bid-offer are not reliable on the pink sheets. it can happen there, for instance, that a stock is bid/offer 5000@1.60/5000@1.90. you place a bid for 500 shares at 1.65. half an hour later it trades @1.60 but this doesn't necessarily mean, you got filled at your 1.65 bid! I have experienced that several times."

      I can explain this. The "pink sheets" are composed of multiple (I have no idea how many) small markets with independent best bids and best asks. This is similar to the situation with listed securities, however, the big difference is that the best bid and best asks can and do vary greatly between different pink sheet markets (much wider than "listed" market variations).

      The real problem is that your particular broker may only have access to and/or submit your bid/ask to an inactive market (for your security of interest) and/or a market that has a significant deviation from best bid or best ask where trades are currently occurring. This is why the pink sheet bid/ask data appears to be unreliable.

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