The Association of Financial Guaranty Insurors, representing the nine companies that insure or reinsure municipal an asset-backed securities, takes strong issue with Richard Lehmann's letter in the August 26 issue stating that demand for Standard & Poor's Corp.'s shadow ratings of insured municipal bonds represents an erosion of confidence in bond insurance.

In fact, investor confidence in insured bonds remains high, as evidenced by record levels of insured new municipal bond issues -- 31% for the first half of the year. Interest in shadow ratings -- where it exists at all -- is driven by a small number of issuers who wish to use them to demonstrate their own financial strength.

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