ACA Capital shares could fall on subprime: Barron's
NEW YORK (Reuters) - ACA Capital Holdings (ACA.N: Quote, Profile, Research) shares, already down 50 percent in the last two months, could fall further if the subprime mortgage crisis continues, Barron's said on Sunday.
ACA, with a market value of about $260 million, has guaranteed $61 billion of collateralized debt obligations, including subprime and other instruments backed by various corporate and commercial mortgage debt, Barron's said in its August 6 edition.
Should the U.S. subprime troubles prove to be systemic across different geographies, then not only would shares be hammered, but the company could be toast, Barron's said.If ACA buckles under, Wall Street firms whose securities the company insured would also be hurt. The $61 billion of ACA's insured exposure would come cascading back to balance sheets of the likes of Bear Stearns (BSC.N: Quote, Profile, Research), Merrill Lynch (MER.N: Quote, Profile, Research), Lehman Brothers (LEH.N: Quote, Profile, Research), and Citigroup (C.N: Quote, Profile, Research) along with some 25 other Wall Street counterparties, Barron's said.