Macquarie gets into muni bond insurance

Macquarie the Sydney investment bank and funds manager best known for toll concessions is planning to work the other side of the street. In partnership with a Chicago finance group Citadel they have formed Municipal and Infrastructure Assurance Corporation, which hardly rolls off the tongue easily, but will probably be known by the acronym MIAC. Recently licensed in New York State as an insurer MIAC will go after the municipal and state bond insurance business previously dominated by Ambac and MBIA.

MBIA and Ambac both got into deep trouble over insuring mortgage based securities and other dubious 'structured finance' debt. They lost their key AAA ratings in early June, undermining their competitiveness.

MIAC wants to keep to the public authority bond business, it says.

Macquarie stock suffered in the recent market meltdown though not as badly as most US investment banks. It is currently trading at A$13 vs an annual high of A$30.34 and a low of A$8.16. (A$=67c today)

MIAC's major competitor will be Berkshire Hathaway Assurance Corporation.

TOLLROADSnews 2008-10-21