NEW YORK (Reuters) - Shares of three major bond insurance firms with exposure to Puerto Rico fell on Monday after a “60 Minutes” episode aired on Sunday highlighted the extensive damage wreaked on the island by Hurricane Maria.
Andrew Gadlin, a research analyst at Odeon Capital Group, said the market was showing a “strong response” to the episode.
“There’s two ways investors respond to something like this: the first, emotional. ‘Do I want to make money on a creditor trying to recover from people who are in such trouble?’ And then the second, the purely intellectual. ‘Do I think that creditor can make good on its payments, on its debt?'” Gadlin said.
Assured Guaranty Ltd. fell 2.0917 percent to $36.51, Ambac Financial Group, Inc. was down 2.545 percent to $15.7 and MBIA Inc. slipped the furthest, down 3.8682 percent to $6.71.
Hurricane Maria tore through Puerto Rico in September, wiping out the island’s electricity grid and damaging the U.S. territory’s infrastructure, further limiting its ability to help resurrect its teetering economy.
In May, Puerto Rico filed for bankruptcy, with $72 billion of total debt it cannot pay. The Puerto Rico Electric Power Authority filed for a form of bankruptcy in June to shed $9 billion of debt.
“For MBIA and Assured Guaranty, who have a lot of electric utility debt, there’s a direct link, in particular to MBIA, where they have a lot of near-term debt service requirements on that electric utility debt,” Gadlin said.
“Ambac doesn’t have any electric utility debt, but it responds very strongly to the overall sentiment in Puerto Rico,” he said.
Assured Guaranty on Thursday reported net income for the third quarter of 2017 was $208 million, or $1.72 per share, according to a statement.
In comparison, during the same time last year the company reported net income at $479 million, or $3.60 per share.
“The expense in third quarter 2017 was due mainly to the increase in loss reserves on Puerto Rico exposures,” the statement said.
MBIA will announce third-quarter results on Tuesday, with a mean estimate of earnings per share of $0.10; Ambac will announce results on Wednesday, with the mean earnings per share estimate at $1.05.
Reporting by Stephanie Kelly; Editing by Daniel Bases and Dan Grebler