On shaky ground
Bond insurer MBIA has hit back at suggestions by New York hedge fund Gotham that its triple-A credit rating is not justified, given the firm’s financial profile. Hardeep Dhillon looks at each side’s arguments and the wider implications for the credit markets.
On its website, triple-A rated bond insurer MBIA proudly displays an illustration of three columns, each with a large letter ‘A’ on top. The image, presumably, is meant to convey the impression that MBIA’s triple-A credit rating is rock solid, that it underpins the company’s success, and perhaps even that its rating is lifted above the everyday issues that have negatively affected so many other companies’ credit ratings.
As a bond insurer, a financial institution has to be not only financially
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