Investors rap MBIA over Eurotunnel payout

Monolines do not take on risk, they sell protection. Investors that buy wrapped bonds are not buying a triple-A bond, they are buying a financial guarantee. Fortunately, the default history of the industry means that investors do not have to dwell on the implications of this very often. But the protracted saga of Eurotunnel’s debt restructuring (which was finally resolved in January this year) is a salutary lesson for any investor as to what a monoline wrap actually means.