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Article: Moody's sees danger in recent EETC repurchase by MBIA.(enhanced equipment trust certificate)
- Article from:
- Asset Securitization Report
- Article date:
- April 14, 2003
- Author:
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MBIA's exercising of a purchase option imbedded in the surety of a US Airways Enhanced Equipment Trust Certificates may have had a negative impact on investors, though it presented the opportunity for a financial gain for the insurer, at the expense of bondholders, Moody's Investors Service said in a recent report. Moody's argues that the exercising of its option to buy the securities at par, despite the fact that they may be trading at a premium, skews the risk assessment made by the rating agency, as well as investors, particularly if such covenants are not known beforehand.
Officials from MBIA were not available for comment as of press time.
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