Fitch Solutions: MGIC CDS Spike Over 100% Since Start of 2016

NEW YORK--(BUSINESS WIRE)-- Changes in policy pricing strategy may be leading to wider credit default swap (CDS) spreads for MGIC Investment Corporation, according to Fitch Solutions in its latest CDS case study snapshot.

Five-year CDS spreads on MGIC widened over 100% since the start of the year to price at the widest levels observed since June of 2013. The cost of credit protection on MGIC's debt has moved further into distressed space and is now pricing in 'B+' territory.

"CDS on MGIC began widening steadily since the start of the new year, leading up to the company's fourth quarter earnings release," said Director Diana Allmendinger. "Dampening market sentiment for MGIC may be attributed to changes in its pricing strategy, which may result in a reduction of policies for 2016."

Fitch Solutions case studies build on data from its CDS Pricing Service and proprietary quantitative models, including CDS Implied Ratings. These credit risk indicators are designed to provide real-time, market-based views of creditworthiness. As such, they can and often do reflect more short term market views on factors such as currencies, seasonal market effects and short-term technical influences. This is in contrast to Fitch Ratings' Issuer Default Ratings (IDRs), which are based on forward-looking fundamental credit analysis over an extended period of time.

Fitch Group is a global leader in financial information services with operations in more than 30 countries. Fitch Group is comprised of: Fitch Ratings, a global leader in credit ratings and research; Fitch Solutions, a leading provider of credit market data, analytical tools and risk services; BMI Research, an independent provider of country risk and industry analysis specializing in emerging and frontier markets; and Fitch Learning, a preeminent training and professional development firm. With dual headquarters in London and New York, Fitch Group is majority owned by Hearst.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160127006370/en/

Fitch Solutions
Diana Allmendinger
Director
+1-212-908-0848
Fitch Solutions
33 Whitehall Street
New York, NY 10004
or
Media Relations:
Sandro Scenga, New York, +1-212-908-0278
[email protected]

Source: Fitch Solutions

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