Municipal bond insurers face a still undetermined risk from the impact Hurricane Katrina will have on public debt, said rating agency analysts.
Fitch Ratings, New York, said Friday it does not expect Katrina losses to affect the financial strength of any of the financial guarantors it rates.
But while few guarantors have experienced losses as a result of natural disasters, the force of Katrina could set new precedent in this area, Fitch announced.
Financial guarantors have reported $14.6 billion of municipal bond value in force in the Federal Emergency Management Agency designated areas.
"Given the disruption taking place within the area, we anticipate insured exposures within Greater New Orleans to be more at risk of stress in the future," said Fitch analyst Thomas Abruzzo.
Standard & Poor's analyst Richard Smith said that four bond insurers are "clearly facing uncertainty given the magnitude of their exposure in the Gulf region."
He said they are ACA Financial Guaranty Corp., Ambac Assurance Corp., Financial Guaranty Insurance Co., and MBIA Insurance Corp.
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