1/22/2008

TEXAS TOLL ROADS NEW HURDLE: Bond Insurance Perfect Storm

Sure the Texas freeway tolls steal our tax dollars and right of way, but bonds are also part of the mix - so the special interests can leverage our assets for maximum profits.

And, within the toll road bonds the toll authorities make a bad investment look better by purchasing very expensive bond insurance, just like the CTRMA purchased to make 183A almost junk status bonds look like top notch bonds:

Rated BBB-/Baa3 underlying and AAA/Aaa with bond insurance.
A new Forbes article called "Bond Issuers Face New Costs In Insurance Crisis" tells how the insurance crisis is effecting bond insurance:
"The perfect storm took time to brew, but it hit hard and fast when it came--much harder and faster than we expected," says Banc of America Securities analyst Tamara Kravec
The 2005 Comptroller's report said the 183A bond insurance was vital to CTRMA:
As mentioned earlier, CTRMA insured the $168 million in senior lien bonds. CTRMA’s financial advisors considered bond insurance vital, as they were concerned that there would not be a market for uninsured bonds issued by a start-up toll road authority. Financial Guaranty Insurance Company (FGIC) insured the revenue bonds at a cost of approximately $9 million to CTRMA. The insurance helped CTRMA obtain a better rating for their bonds, thus reducing the total amount that the authority needed to borrow to support the project.

1 comment:

Mandelina said...

Good for people to know.