Leading private equity firms are unlikely to participate in any recapitalisation of Ambac and MBIA, increasing the pressure on banks to come up with a rescue package for the bond insurers.
A number of firms, including Bain Capital,
Carlyle Group, Kohlberg Kravis Roberts and TPG, have looked at investing in the cash-strapped groups, which guarantee the value of everything from municipal bonds to the most complicated mortgage securities.
...
These investors have all concluded that the risks are far too great, according to people familiar with their thinking.
...
“If we worry that we can get shot from the shadows by something we can’t see coming, it is not for us,” says the managing director in charge of financial service investments for one of the leading private equity funds. “The financial guarantors pass neither the shadow test nor the ability to understand test.”
The next two to four weeks will be vital for the bond insurers because the biggest ratings agencies have made it clear they are very close to cutting their ratings. Fitch, a smaller ratings agency, has already cut the Triple-A ratings of Ambac and FGIC.
Financial TimesMy, my, the
Carlyle Group finds 'value' in nursing homes not bonds insurers.
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