AIG, MBIA woes have uncertain effect on European deals

The American International Group downgrade, coupled with the recent troubles at MBIA, has raised concerns over the possible ramifications for the European markets if a monoline insurer were to take a ratings hit.

"On our count, monolines have guaranteed just over 5% of triple-A public issuance in the European securitization market since the mid-1990's," said researchers at Deutsche Bank Securities. "Ambac and MBIA dominate. We note that many of the wrapped deals barely fit the textbook definition of a securitization - think project finance and U.S.-style revenue bonds instead."