Municipal bond insurers should be able to make good on their promises to back debt issued by state and local agencies in the region affected by Hurricane Katrina, according to Fitch Ratings.[@@]
Fitch, New York, has published a table showing that bond insurers have backed about $15 billion in municipal bonds in the region affected by Katrina.
That total amounts to only 0.8% of total municipal bond net par in force, but it amounts to about 35% of the major guarantors' claims-paying resources, according to a table compiled by Fitch based on reports from the guarantors.
Richard Smith, an analyst at Standard & Poor's, New York, says 5 bond insurers are "clearly facing uncertainty given the magnitude of their exposure in the Gulf region."
Thomas Abruzzo, a Fitch analyst, concedes that Katrina has caused problems for municipal bond issuers in the affected region.
"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," Abruzzo says.
