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Assured Guaranty Ltd. Message Board

  • tony27719 tony27719 Apr 16, 2011 6:54 PM Flag

    OT: A thought for AGO mini bond guys.

    Hi guys,

    A thought crossed my mind regarding yesterday's announced settlement between AGO and BAC for $1.6 Billion on insured mortgage loans.
    You'll recall 2 months ago AGO stated that if necessary it would raise $1.5 billion in capital to meet S&P's proposed leverage test to ensure a AAA rating. With the settlement this burden is virtually eliminated. I believe that an upgrade will be forthcoming soon from both S&P and Moody's before any stress test is done.

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    • Although Sean didn't agree with me when I first suggested the mini bonds might be called in. I still believe AGO_B will be called in since it has the highest coupon of 6.875% and its redemption cost will be $101MM, not a big deal for AGO.
      Moreover, by taking it out AGO won't have to pay NYSE listing costs or SEC reporting costs.

    • Excellent point! Thanks. Also, note that Goldman Sachs has been buying Muni bonds hand over fist!! Confirms my suspicion that Meredith Whitney was out of her league when she commented about Muni bond disaster. So far, the effect has been minimal.

      So, AGO at current price is an excellent value play for the long haul!!

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