Dexia adds 500 mln dlrs to US bond insurer's capital
Belgian-French banking group giving its US bond insurance unit Financial Security Assurance a 338-million-euro capital infusion
BRUSSELS, Feb 5, 2008 - Belgian-French banking group Dexia said on
Monday it was giving its US bond insurance unit Financial Security Assurance a
500-million-dollar (338-million-euro) capital infusion to help it grab more
"These resources will add capacity for FSA to take advantage of increasing
opportunities that have recently arisen in the US municipal and public
infrastructure finance markets," Dexia said in a statement.
The subprime mortgage lending crisis in the United States has engulfed many
US bond insurers, which in recent years had insured securities made up of high
risk loans that have since soured.
Credit rating agencies are reviewing several top insurers for possible
downgrades, which could in turn lead to the downgrade of billions of dollars
in bonds insured by them.
However, Dexia said that FSA's top triple-A credit rating was not under
threat and that demand was strong for bonds insured by it, creating
opportunities to grab more market share.
"Given the shake-up of the financial guaranty competitive landscape and the
significant value-creating opportunities which we are seeing every day in the
US public finance market, it is now time to ... to put more capital at work,"
Dexia chief executive Axel Miller said.