Bloomberg - Bill Ackman is once again taking aim, this time at Financial Security Assurance Holdings. He is buying CDS on the insurance company’s debt. Financial Security owns 64% of all municipal bonds sold in the US during the first quarter.

Currently Financial Security and Assured Guaranty Ltf are the only bond insurers to keep a top rating and stable Fitch outlook but Assured fell 58% in NY trading on Monday and is currently trading at $10.99 after Moody said it might downgrade the firm.

Rob Haines, a CreditSights analyst said, “Potentially all the legacy companies are gone now [...] it has huge implications in the municipal bond market and for banks that may have to take another round of writedowns.”

“There’s not likely to be a man left standing [...] This thing is over already, the market just doesn’t know it yet,” says Ackman. Ackman, bet against MBIA and Ambac before their shares tumbled 90% during the past year with his hedge fund, Perishing Square Capital Management.

To contact the reporters on this story:
Christine Richard in New York at +1-212-617-4929 or
crichard5@bloomberg.net;

Sources

Assured Guaranty Plunges, Bond Risk Soars on Review (Update2)

Ackman Foresaw MBIA Drop, Is Short Financial Security (Update3)