Assured Guaranty Rockets Higher Despite Rating Cut

Shares of Assured Guaranty

are screaming higher this morning despite S&P lowering its credit rating on the name. currently, shares are higher by 19.59%, trading at $11.60. Shares are expected to find resistance here, given that it is trading at the 50-day moving average. AGO has also rallied 26.6% in four days. Some of this move can surely be attributed to the 4.41% short interest, but in general it appears that the market was bracing for either a steeper cut in the company's credit rating or the possibility of the rating remaining on watch negative. S&P issued the report yesterday, which changed the financial strength ratings of bond insurers Assured Guaranty Corp. and Assured Guaranty Municipal Corp. to AA- Stable Outlook from AA+ CreditWatch Negative, and the rating of Assured Guaranty Re Ltd. to AA- Stable Outlook from AA CreditWatch Negative. Commenting on the change, President and Chief Executive Officer of Assured Guaranty Ltd., stated, “This rating action is solely based on S&P's new criteria for rating financial guaranty companies, as to which we have previously registered our concerns. Despite the higher capital standards, Assured Guaranty has maintained its ratings in the AA category by continuing to execute its capital enhancement strategies.” "Further, the Stable Outlook assigned to our ratings reflects S&P's recognition of the quality of our insured portfolio, our underwriting discipline, risk management capabilities and strong competitive position. Our AA- Stable ratings result in us maintaining some of the highest S&P ratings for a company in the financial sector. Assured Guaranty Ltd. is a Bermuda-based holding company that provides, through its subsidiaries, credit protection products to the United States and international public finance, infrastructure and structured finance markets.