Egan Jones: Expect “Massive” Losses for Bond Insurers
From:
http://calculatedrisk.blogspot.com/2007/11/egan-jones-expect-massive-losses-for.html
Egan Jones: Expect “Massive” Losses for Bond Insurers
From Bloomberg: MBIA, Ambac Losses Will Be `Massive,’ Egan Jones Says
Bond insurers … face “massive losses” over the next few quarters that could test their ability to raise new capital, Egan-Jones Ratings Co. said.
MBIA may lose $20.2 billion on guarantees and securities holdings, Sean Egan, managing director of Egan-Jones, said on a conference call today. ACA Capital may take losses of at least $10 billion; New York-based Ambac may reach $4.3 billion; mortgage insurers MGIC Investment Corp. and Radian Group Inc. may see losses of $7.25 billion and $7.2 billion, respectively, Egan said.
“There is little doubt that the credit and bond insurers face massive losses over the next few quarters and many will be capital challenged,” Egan said.
Egan-Jones (not included in article) also expressed concern about possible major writedowns coming at Lehman and Bear Stearns. They commented that ResCap probably isn’t sustainable without a capital injection. And for the homebuilders:
“Watch for some failures over the next couple of quarters.”
UPDATE: From the WSJ: Morgan Stanley May Take Hit From Subprime
Two analysts are projecting the firm may take a fourth-quarter write-down of $3 billion to $6 billion. The estimates by analysts David Trone of Fox-Pitt, Kelton and Mike Mayo of Deutsche Bank AG …
…
Another research firm, CreditSights, yesterday estimated potential fourth-quarter CDO hits at $9.4 billion for Merrill, $5.1 billion for Goldman, $3.9 billion for Lehman, $3.8 billion for Morgan Stanley and $3.2 billion for Bear Stearns.
