1 / 18

Municipal Bond Insurance: Current Observations and Historic Trends

This presentation provides an in-depth analysis of the current municipal bond insurance environment, including observations on capital and balance sheet strength, the role of monoline bond insurers, and historic debt and insurance issuance. It also discusses emerging trends and the future outlook of the market.

nmckay
Télécharger la présentation

Municipal Bond Insurance: Current Observations and Historic Trends

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Presentation to NFMA Twenty-Fifth Annual Conference Today’s Municipal Bond Insurance Environment John Hallacy, Managing Director May 9, 2008 CONFIDENTIAL DRAFT

  2. Table of Contents Presentation to NFMA Twenty-Fifth Annual Conference 1. Current Observations 1 2. Historic Debt and Insurance Issuance 7 3. The Monoline Bond Insurers 10

  3. Current Observations

  4. Current Observations • It is all about Capital and Balance Sheet strength. • The ability to withstand critical stress tests from the Rating Agencies with Capital remaining on hand is of paramount importance. • How much capital is sufficient? • Is the capital worth having if the cost is too dear? Capital Raising efforts have been valiant. • A developing theme is the strong will become stronger and the weak will become weaker. • Capital infusions from luminaries is important but cannot be fully relied upon. • There is now a “Tiered Market” with and without credit support. • Entrance of Berkshire Hathaway Assurance Corporation 1

  5. Current Observations • The view from the short end of the curve is materially different from the long end of the curve. • Will 2a-7 be revisited. • Issuers buying there own auction paper is a developing new trend. • Is calm emerging in the market or not? With the recent swings in equity values one would think not. • The importance of underwriting standards has been demonstrated in the extreme. • It is all about the valuations or the “Mark”. • Will housing and therefore the subprime market find a bottom? It appears more pain will need to be endured in various markets. 2

  6. Current Observations • More than ever, intelligent debate is critical to finding our way out of the morass. • The role of the benevolent regulator has crested. • How much may the regulator do to provide a catalyst to foment actions by the companies that will stabilize the companies and, in turn, the market. • What does the future hold? • Merge; Consolidate; Acquire; Seek Capital; Issue Debt or Equity or de-list and go into run-off? • The HIBI case. • Our panelists are going to enlighten us today. • The following slides are to kick-off the commentary by our panelists. 3

  7. Jasper Johns’ “Map” Current Observations ____________________ Source: Museum of Modern Art 4

  8. U.S. Foreclosure Rates Heat Map - 2007 Current Observations ____________________ (1) Realtytrac 5

  9. Ratings Map Current Observations ____________________ (1) Rating published on September 5, 2007. (2) Company may be up for sale (Reported April 9, 2008) 6

  10. Historic Debt and Insurance Issuance

  11. Historic Municipal Issuance vs. Historic Insured Debt Historic Debt and Insurance Issuance 7

  12. Historic Municipal Issuance vs. Historic LOC Backed Debt (000’s) Historic Debt and Insurance Issuance 8

  13. Historic Municipal Issuance vs. Historic Standby Purchase Agreement Backed Debt (000’s) Historic Debt and Insurance Issuance 9

  14. The Monoline Bond Insurers

  15. The Monoline Bond Insurers Capital Position (in millions) Net Par Outstanding AMBAC - $524,025 MBIA - $678,661, FSA - $426,342 AGC - $94,127 CIFG - $94,700 RADIAN - $116,022 10

  16. Balance Sheet Strength – AAA Insurers (in billions) The Monoline Bond Insurers ____________________ Source: MBIA 11

  17. The Monoline Bond Insurers Financial Ratios 12

  18. Merrill Lynch prohibits (a) employees from, directly or indirectly, offering a favorable research rating or specific price target, or offering to change such rating or price target, as consideration or inducement for the receipt of business or for compensation, and (b) Research Analysts from being compensated for involvement in investment banking transactions except to the extent that such participation is intended to benefit investor clients. This proposal is confidential, for your private use only, and may not be shared with others (other than your advisors) without Merrill Lynch's written permission, except that you (and each of your employees, representatives or other agents) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the proposal and all materials of any kind (including opinions or other tax analyses) that are provided to you relating to such tax treatment and tax structure. For purposes of the preceding sentence, tax refers to U.S. federal and state tax. This proposal is for discussion purposes only. Merrill Lynch is not an expert on, and does not render opinions regarding, legal, accounting, regulatory or tax matters. You should consult with your advisors concerning these matters before undertaking the proposed transaction. Disclaimers • In certain regions or jurisdictions this disclaimer may not apply. You must consult with your regional Origination Counsel to ascertain whether this disclaimer is applicable. 13

More Related