A trick too far
Troubled monolines have underwritten a plethora of subprime mortgage-linked collateralised debt obligations for dealers. But with further deterioration in the subprime mortgage market, are these guarantees worth the paper they're written on? Mark Pengelly investigates
Monoline insurers have pulled off some dazzling tricks over recent years. Having moved out from their traditional business of wrapping municipal bonds, long-established monolines entered into the higher-margin arena of structured finance. With onlookers aghast, a neat tap of the wand caused dealer exposures to collateralised debt obligations of asset-backed securities (CDOs of ABSs) to disappear
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