It also sees the government as ready to bailout senior bondholders in Credit Suisse and UBS but heavily downgrades ratings on subordinate debt on the assumption that, should the banks in Zurich get in trouble again, Geneva might take the radical Marxist action of letting investors in highly speculative uninsured bonds
actually experience some capitalism.
Analyzing bond data in the early 1980's, Carpenter (1991) found that insured bonds had a yield 87 percent lower than uninsured bonds
In the variable rate demand market, there is still demand for uninsured bonds
or bonds not tied to weak bond insurers, but only time will tell how this market will react to the newly strengthened bond insurers.
For example, spreads for uninsured AAA-rated and AA-rated bonds were negative, meaning that the insured bonds actually had higher yields than the uninsured bonds