Along with identifying the counterparties to its credit default swaps, A.I.G. has provided more details about the tens of billions of dollars in government money it paid out to settle those contracts with financial institutions such as Goldman Sachs.
The growing crisis at Ambac Financial, one of the biggest bond insurers, is raising questions about Wall Street's exposure as counterparties to the bond-insurance industry, Forbes.com wrote.
Shares of Ambac and rival MBIA, both battered by losses from the collapse of the subprime mortgage market, fell sharply Thursday on concern they would lose their AAA credit ratings.
The $3 billion write-down reported by Merrill Lynch on Thursday was the result of hedges with ACA Financial Guaranty, an insurer that slipped to junk grade during the fourth quarter.
As counterparties, many banks are on the hook for billions in insurance they bought to hedge credit-derivatives positions. The insurance policies, called credit default swaps, have exploded in popularity in the last few years, with some $45 trillion outstanding, Forbes wrote.
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counterpartyThe other party that participates in a financial transaction. Every transaction must have a counterparty in order for the transaction to go through. More specifically, every buyer of an asset must be paired up with a seller that is willing to sell and vice versa.
Along with identifying the counterparties to its credit default swaps, A.I.G. has provided more details about the tens of billions of dollars in government money it paid out to settle those contracts with financial institutions such as Goldman Sachs.
Shares of Ambac and rival MBIA, both battered by losses from the collapse of the subprime mortgage market, fell sharply Thursday on concern they would lose their AAA credit ratings.
The $3 billion write-down reported by Merrill Lynch on Thursday was the result of hedges with ACA Financial Guaranty, an insurer that slipped to junk grade during the fourth quarter.
As counterparties, many banks are on the hook for billions in insurance they bought to hedge credit-derivatives positions. The insurance policies, called credit default swaps, have exploded in popularity in the last few years, with some $45 trillion outstanding, Forbes wrote.
Go to Article from Forbes»
Go to Article from Bloomberg News via The New York Times»
counterpartyThe other party that participates in a financial transaction. Every transaction must have a counterparty in order for the transaction to go through. More specifically, every buyer of an asset must be paired up with a seller that is willing to sell and vice versa.
counterparty
NOUN
Counterparty Risk.
From 路透金融词典. 对手风险.
counterpart
noun [C]
a person or thing which has the same purpose as another one in a different place or organization:
The Prime Minister is to meet his European counterparts to discuss the war against drugs.
counter・partFrom 路透金融词典. 对手风险.
counterpart
━━ n. （対(つい)の）片方, 片割れ; （正副書類の）一通; 写し; 似た人［もの］.
counterpart fund 見返り資金 ((外国からの無償援助資金額に等しい自国通貨の積立金)).
counterpart fund 見返り資金 ((外国からの無償援助資金額に等しい自国通貨の積立金)).
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