Billionaire tycoon Warren Buffett has offered to reinsure $800 billion in municipal bonds now insured by three troubled reinsurers hard hit by the US mortgage and credit crunch.
Buffett discussed the offer to Ambac, MBIA and FGIC, insurers at risk of losing their AAA credit ratings due to problems with sub-prime, or high-risk, mortgages and other loans, during a telephone interview with the CNBC business television network.
The offer lifted stock markets, which have been worried about the effect problems at bond insurers could have on the wider financial sector. European markets rose by as much as 3% this evening, while the Dow Jones was more than 1.5% higher in New York.
Buffett, a legendary American investor, said he had sent that offer to the bond insurers last week, and that he was giving them 30 days to find a better deal.
Buffett, who heads Berkshire Hathaway, said one bond insurer had turned down the offer and the other two had not responded, without giving more precise details.
