Friday, November 14, 2008 0 comments ++[ CLICK TO COMMENT ]++

Dexia Sells FSA to Assured Guaranty

Assured Guaranty is picking up Dexia's monoline insurer, FSA:

Dexia has agreed to sell its struggling FSA bond-insurance unit for $722 million as the Belgian-French bank also reported Friday a loss of 1.54 billion euros ($1.96 billion) for the third quarter.

Dexia said the deal reached with Assured Guaranty , the U.S. bond insurer backed by billionaire Wilbur Ross, doesn't include FSA's asset-management business, which has a $16.5 billion portfolio of risky debt.

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Assured Guaranty will pay a 50-50 mix of cash and shares for the rest of the FSA business, which includes a $425 billion insurance portfolio. Following the deal, Dexia will hold a nearly 25% stake in Assured Guaranty.


Assured Guranty is only picking up the monoline bond insurer and not the asset management business, which has caused problems for Dexia. Assuming the price is low--I suspect it is given that the whole industry has been written off--it is a good deal for Assured Guaranty. FSA has a clean book, with manageable exposure to subprime mortgages.

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