Ambac Financial Group Inc. and MBIA Inc., though unlikely to get direct government investment, may be able to use the Treasury's Troubled Asset Relief Program to liquidate bonds backing securities guaranteed by the companies, according to Royal Bank of Scotland PLC analyst Michael Cox.

"I think a bailout at this stage is unlikely," Mr. Cox, who is based in London, wrote in a research note published Thursday. "The monolines may benefit from TARP in other ways, though."

The Treasury's $700 billion program to buy troubled assets, known as TARP, may let the two guarantors dispose of bonds backing collateralized debt obligations they guaranteed, Mr. Cox wrote. Banks also may be more willing to cancel credit-default swap contracts they bought from bond insurers if the banks can sell the underlying CDOs to the government, he wrote.

CNBC reported Wednesday that the Treasury was considering taking equity stakes in MBIA and Ambac, the world's largest bond insurers, as well as in the mortgage insurer PMI Group Inc. if the companies would agree to back more assets held by banks. But Jennifer Zuccarelli, a spokeswoman for the Treasury, said, "That's not an idea we're focused on or pursuing."

Five of seven bond insurers, including MBIA and Ambac, lost their AAA ratings this year as losses surged on securities linked to subprime mortgages. As the insurers' ratings collapsed, banks that had bought protection against a decline in value of the CDOs they held were forced to write down the value of the contracts shielding the securities.

"Recent actions to inject capital into banks should mean that the banks have the capacity to deal with further writedowns in the value of the hedges they have bought from monolines," Mr. Cox wrote.

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