Saturday, August 9, 2008 0 comments ++[ CLICK TO COMMENT ]++

Final Chapter for ACA

ACA, the weakest monoline, encountered its final fate today. It basically gave away 95% of the company to counterparties and will go into run-off. The stock closed the day on Pink Sheets OTC at $0.46 and I'm not sure if shareholders will get anything in the end.

ACA Capital Holdings Inc., the bond insurer that lost its investment-grade credit ratings in December, terminated $65 billion in credit-default swap contracts and turned over most of the company to creditors.

Counterparties now own a 95 percent residual interest in New York-based ACA Capital's insurance unit through surplus notes, the company said in a statement today.

ACA was pretty much toast as soon as the subprime virus started getting out of control late last year. ACA's rating was cut to CCC near the end of last year and it was all over for them. The problem ACA had was that their insurance contracts required them to post collateral upon a serious downgrade (below A- supposedly). This instantaneously made ACA insolvent. None of the other bond insurers have to post collateral as far as I can tell.


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