FINANCE

FINANCE

Bond Insurers Face Rating Threat

The AAA ratings by Moody's Investors Service on bond insurers Ambac and MBIA may be cut, Moody's said, which could increase borrowing costs for cities and counties already struggling with lower tax revenue.

Since the surge in mortgage defaults began last year, ratings agencies and investors have worried that bonds backed by pools of troubled loans would also increasingly default, leading to a spike in claims that could drain insurers' capital reserves. A downgrade in the rating for Ambac and MBIA is likely to make it hard for them to book new business. In recent quarters, bond insurers have been increasing loss reserves and trying to raise new capital to cover a potential spike in claims.

GMAC Completes Refinancing

GMAC, the consumer lender trying to salvage its money-losing mortgage business, arranged more than $60 billion in new and refinanced credit to quell concern about its financial health.

The package includes an $11.4 billion revolving credit line that matures in three years; renewal of a one-year, $10 billion commercial paper agreement; a one-year extension for GMAC's Residential Capital unit on $11.6 billion of bank facilities; and $2.5 billion of new credit to finance home lending.

REGULATORS

Ex-Senate Lawyer Joins PCAOB

Steven Harris, formerly the top lawyer on the Senate Banking Committee and someone who helped write the Sarbanes-Oxley Act, was appointed to the Public Company Accounting Oversight Board, which oversees auditing at public companies. The Securities and Exchange Commission, which appoints the board, selected Harris, 60, from his job as senior vice president at APCO Worldwide, a District-based consulting firm.

AIRLINES

Fewer Delays Reported in April

Domestic airlines' on-time arrival rate improved in April, despite more than 3,900 flights canceled by American Airlines, according to government data. More than 22 percent of commercial flights in the United States arrived late, were canceled or diverted in April, according to the Transportation Department's Bureau of Transportation Statistics. That is down from more than 28 percent in March and more than 24 percent in April 2007.

The drop in delays -- which was accompanied by a decline in mishandled baggage -- came despite the fact that many carriers were forced to ground flights in April because of unprecedented government scrutiny of maintenance issues.

American, the nation's largest carrier, canceled 7.6 percent of its flights in April compared with an industry average of 1.7 percent, according to the government data.

MERGERS & ACQUISITIONS

Smucker to Buy Folgers

J.M. Smucker, a maker of jellies and jams, is adding coffee to its menu of brands by buying Folgers from Procter & Gamble in an all-stock deal valued at $3.3 billion.

In the deal, Smucker would assume about $350 million of Folgers's debt. Smucker also sweetened the offer for its current shareholders with a special pre-acquisition $5 dividend.

P&G shareholders would wind up owning 53.5 percent of Smucker, with current Smucker shareholders owning the rest.

EARNINGS

Williams-Sonoma, a housewares retailer, said first-quarter profit fell 42 percent after it reduced prices to lure shoppers discouraged by the worst housing slump in at least 25 years. The company reported profit of $10.4 million, down from $18.2 million in the corresponding quarter of 2007. Revenue fell 4 percent, to $781.8 million.

Compiled from reports by Washington Post staff writers, the Associated Press and Bloomberg News.