CIFG-Insured Bonds to be Upgraded With Takeover

By: Dr. Jay H. Abrams
Chief Municipal Credit Analyst

• Looking for Specific Bonds?

Do you have specific criteria for bonds you're looking for? Let us know and we'll e-mail you bonds that fit your needs. There is no charge for this service.

Bonds carrying CIFG insurance appear headed for an upgrade to “AAA.”

Assured Guaranty, one of the remaining “AAA”-rated bond insurers, announced it has reached agreement to take over $13 billion of CIFG’s existing bond insurance commitments. Upon closing the transaction in the fourth quarter of 2008, Assured will seek investor approval to cancel existing CIFG policies and replace them with Assured policies. The newly insured bonds will carry Assured’s “AAA” rating.

Following downgrades this year resulting from its exposure to risky sub-prime mortgage debt, CIFG saw its one-time “AAA” rating dropped to “Ba2” by Moody’s and “B” by Standard & Poor’s. With the assistance of the New York state insurance commissioner, CIFG sought to strengthen the value of its once pristine credit enhancement for its outstanding insured bonds. Assured’s offer to take over substantially all of CIFG’s public finance portfolio is evidence that the municipal bond insurance industry is working to protect bondholders who have traditionally relied on bond insurance for peace of mind.

Assured Guaranty Corp. is rated triple-A by the three leading rating agencies and is licensed in all 50 states, the District of Columbia and Puerto Rico.

10/29/2008