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When Momentum Builds

19 December 2013 by HCM

A few days ago, we mentioned FSA ( Assured Guaranty Ltd.) and their problems related to Puerto Rico and to the municipalities’ bankruptcies in the US. These concerns have also affected MBIA and have been confirmed in investors’ mind. On the back of that, we have seen a strong momentum build on the risk premium of FSA which have now risen from 377bps to 547bps during the month of December in healthy volumes ($131M were traded last week). When momentum builds in credit, spreads can go a very way…