You may be correct, but my main concern was (is) FG.
I think now that the exceptional items are under control, the MI is very predictable. There's a limit to how badly MI will do over the next few years. And cashflow is fine. The IMO unwarranted panic over MI doesn't concern me at all. That's all a numbers game, and I dont' see a situation where the numbers can't be managed.
FG is the area that concerns me most because that's where the hidden mines are blowing up. So it's somewhat reassuring to see Moody confirm Radian's view of their book. Of course, it wouldn't be the first time that a ratings agency was wrong about the quality and quantity of the risk - so it's still a worry.
It's become pretty obvious to me - from what I have read and heard from numerous different sources - that Moody's is not going to downgrade RDN. Not now. I'd now put it as low as a 5% chance.
All the bad news is widely known at this point. Everyone knows these companies won't be profitable for quite a few quarters to come. Unless there's a major negative SURPRISE, it's paint by numbers from this point forward.
I wish we had more detailed info about what FG has, but it's simply not available to the investin public.
I am *SO* hoping that this stock goes down again, or at the very least does not take off now.
Been humming this REM song quite a bit lately....lol...
It's the end of the world as we know it.
It's the end of the world as we know it.
It's the end of the world as we know it and I feel fine.
As to the posting of the Moody's note:
I have been to Moody's and found the note.
I have also returned to Radian's Web Site to make sure of what Radian Asset Insurence is.
This is tentative but good news for that part of the business that competes with MBIA to insure bonds. It is not, however, a reaffirmation of RDN's AA3 rating even for that line of business. There was some earlier discussion on this board about CDOs -- there may be some comfort available in this report.
As to mortgage insurance - that part of the business that competes with MGIC and PMI - any comfort would have to be drawn by an inference --- Mortgage insurence is not the subject of the note.
Report was email in PDF. Here is page 1 of 2.
Announcement: Ambac Assurance Corporation
Correction to text, Nov. 8, 2007 Release: Moody's to Update Rating Opinion on Financial Guarantors
CORRECT RATING FOR CIFG GUARANTY IN FOURTH PARAGRAPH IS Aaa; IN SAME PARAGRAPH
SUBSTITUTE "XL FINANCIAL" FOR "SECURITY CAPITAL" Revised release follows
New York, November 08, 2007 -- This comment updates the status of Moody's analysis of the financial
guarantors and outlines the process we will follow to assess the impact on their ratings of continuing
deterioration in the RMBS market. To evaluate the effect of this development on the ratings of the financial
guarantors, Moody's is re-estimating capital adequacy ratios to reflect deterioration in the expected
performance of transactions within the guarantors' insured portfolios. At the same time, we are updating our
earlier stress-test by determining the impact of higher subprime cumulative loss assumptions on both the
guarantors' direct RMBS and ABS CDO exposures, using granular underlying collateral information as it
relates to vintage, originator, and performance to date.
On Sept 25, 2007, Moody's published a report on financial guarantors' exposure to subprime mortgage risk.
That report cited the risk of guarantors' ABS CDO exposures as potentially significant, given that their
performance would magnify deterioration in underlying RMBS collateral. Since that report, continued
deterioration in the mortgage market has increased the severity of stress scenarios.
There are meaningful differences among the rated guarantors in the potential for capital deterioration to fall
below the levels consistent with their current ratings. As outlined in our September report, the financial
guarantors have varying levels of exposure to the mortgage crisis given the specific content of their insured
portfolios. While the guarantors' direct exposure to recent vintage subprime RMBS is likely to cause some
capital depletion, companies with sizable exposure to CDOs containing higher-risk mortgage-backed
securities are at the greatest risk of developing capital shortfalls. This is particularly true when ABS CDO
transactions contain large buckets of underperforming 2006-07 vintage subprime RMBS collateral and/or
ABS CDO collateral containing subprime risks.
Based on initial analysis of the updated data, we have grouped the guarantors' risk of a capital shortfall due
to mortgage market deterioration as follows:
� Financial Security Assurance Inc. (FSA; Aaa), Assured Guaranty Corporation (Aaa) and Radian Asset
Assurance Limited (Radian Asset; Aa3) have minimal exposure to ABS CDOs and, for this reason, are highly
unlikely to fall below Moody's capital adequacy benchmarks for their rating category.
� MBIA Insurance Corporation's (MBIA; Aaa) is unlikely to fall below Moody's Aaa capital adequacy
benchmarks in a stress scenario.
� Ambac Assurance Corporation (Ambac; Aaa), XL Capital Assurance Inc. (SCA; Aaa), and Financial
Guaranty Insurance Company (FGIC; Aaa) face moderate risk of falling below Moody's Aaa capital adequacy
benchmark under a stress scenario.
� CIFG Guaranty (CIFG, a subsidiary of Aa2-rated Natixis; Aaa) is highly likely to fall below Moody's Aaa
capital adequacy benchmark in a stress scenario. The company has the largest exposure to mezzanine
CDOs relative to its capital base.
Since this analysis was undertaken, updated granular data will allow for a more definitive analysis of capital
adequacy under alternative stress scenarios.
Look at the news on the other companies!
One company bought percentage stakes thereby signalling a
bottom and a GREAT buying opportunity to get into the stock.
I said it the other day...RDN shouldn't be lower than 17