Financial Security Assurance to get $500 million from Dexia for public finance market

By Jennifer Chiou

New York, Feb. 4 - Dexia said that it will contribute $500 million of additional capital to its subsidiary, Financial Security Assurance Holdings Ltd. (FSA), in order for FSA to take advantage of opportunities in the U.S. municipal and public infrastructure finance markets.

According to the company, demand for FSA-insured bonds has grown in recent months, leading to opportunities to write substantial new premiums at high returns on equity for core municipal bond issuers in both primary and secondary markets.

FSA said that these resources increase its qualified statutory capital by 18.5% to $3.2 billion and bring total claims-paying resources to $7.2 billion.

"We have long held the view that maintaining a strong capital position well ahead of minimum rating agency AAA capital requirements is an important aspect of prudent risk management," Robert P. Cochran, chairman and chief executive officer of FSA, said in a news release.

"In a time when many monoline Triple-A ratings have come under pressure, we are happy that our strong risk culture has allowed us to maintain a solid position and that our shareholder shares our view about the very good business prospects that we have in the current environment."

This additional capital will have no impact on the tier I ratio of Dexia and is expected to be increasingly EPS accretive as of 2009.

The company noted that FSA's AAA ratings have been affirmed by Fitch Ratings, Moody's Investor's Service and Standard & Poor's with a stable outlook without consideration of this capital increase.

Financial Security Assurance Holdings is the holding company for monoline bond insurer Financial Security Assurance Inc.

Based in New York, Financial Security Assurance provides financial guarantees and financial products to clients in both the public and private sectors.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.