ACA Financial Guaranty Corp. and Fabkom Inc. yesterday announced a joint venture in which users of ACA's Web site will be able to access data showing the trading value of actively traded bonds the single-A rated insurer has backed.
ACA officials said in an interview yesterday that they believe giving the data to the market will help buyers and sellers assess the value of the insurer's guarantee. The information comes from Fabkom's archive of the Municipal Securities Rulemaking Board's daily trading reports since the beginning of the year.
"Talking to the market, you get a lot of 'what is ACA worth?' even at this stage of the game," said Michael P. Madison, a principal who heads up the firm's broker-dealer relations effort. "The idea is to make it as easy as possible to sell and deal in ACA paper."
Officials from the two firms said no money is changing hands as part of the deal. ACA officials said they benefit from getting news of their trading value and secondary capacity to the market. For their part, Fabkom officials said offering the trading data for ACA-insured deals for free will help them attract users who will pay to subscribe to the company's other services, which include the searchable archive of all MSRB trading data as well as extensive daily listings of offerings from broker-dealers and interdealer brokers.
Although the joint venture was only announced yesterday, Carl J. Bloksberg, a Fabkom vice president, said the firm has already gotten more than a dozen inquiries from potential subscribers to its service who were referred to the company from the ACA site.
Since only bonds that trade four or more times in a day are included in the MSRB's reports, the data is currently only available for about half of the outstanding bonds ACA has backed.
However, officials at the two firms said that since new issues tend to be the most actively traded bonds, that percentage is higher for the ACA deals that were sold since the beginning of the year, and so they expect the percentage for the overall portfolio to grow over time.
Fabkom officials said they also plan to expand their database once the MSRB expands its reports to include information on all trades on a delayed basis. That additional data could be available within the next year.
Visitors to ACA's home page, www.aca-insurance.com, who click on the link to "New Issues Live" will first receive a list of all the primary market deals ACA has guaranteed. By clicking on any of the issues, they will be able to receive both a portable document format version of ACA's one-page summary of key information about the deal and a link to the Fabkom data.
In addition to providing historic data on trading values, the Fabkom page will also indicate whether any of the bonds are listed in Fabkom's municipal offerings database.
For the future, officials at the two firms said they are planning to begin indicating in Fabkom's listings of secondary bond offerings whether bondholders can purchase secondary market insurance from ACA for a given issue. They said about 200 listings on a recent day were eligible for ACA enhancement, and they believe publicizing that information would help encourage trading in the unrated and junk-rated securities that make up ACA's primary business.
"That will add value to our customers if we can show them that they can facilitate a trade that otherwise would not be available to them," Bloksberg said.
Beyond the joint venture, ACA has recently begun posting its list of secondary market insurance-eligible credits on its own Web site. In addition, the firm has made its quarterly financial reports available to visitors as well.
Although ACA is a privately held company and is not required to disclose the data, firm spokesman Byron Klapper said market participants had requested it, and so the firm, which has said it eventually plans an initial public offering, decided to release the information as "training" for that time.
