A Day to Remember in Bonds

If there has ever been a day with more major news about the bond industry, I don’t remember it.

Here are links to three stories … each of which speaks to the tremendous changes in the world of fixed-income investing.

First, and most importantly, New York Attorney General Andrew Cuomo announced he’d reached a deal with Moody’s, Standard & Poor’s and Fitch Ratings to change how they rate debt. The agreement comes following Cuomo’s investigation into what role the credit-rating agencies played in the mortgage-backed securities crisis. The agencies will not be required to pay fines under the deal.

Second, one of those agencies – S&P – today cuts its ratings on the two biggest bond insurers in the world. The move comes a day after Moody’s announced it was placing the ratings of those same insurers -- MBIA Inc. and Ambac Financial Group Inc. – on review for the second time this year. The agencies are concerned by the potential losses in collateralized debt obligations that the insurers have backed. The downgrade could "cripple MBIA and Ambac's ability to write new insurance," according to Reuters,

And third, UBS says it will close its municipal bond business and lay off 280 people. The bank had said last month it would shutter the division if it was unable to find a buyer. The move comes just days after rival JPMorgan Chase & Co. said it would cut its muni-bond department by 15%.