ACA Capital Holdings Inc., the parent of beleaguered bond insurer ACA Financial Guaranty Corp., secured a fifth straight forbearance agreement, negotiating Friday with its counterparties in derivative contracts to put off delinquency proceedings until June 20.

The agreement marks the fifth entered into between the insurer and its 29 counterparties since Standard & Poor's - the only rater that assigns a rating to ACA - downgraded its single-A rating to CCC on Dec. 19.

Many of the guarantees written by ACA were in the form of credit default swaps, a type of derivative with rules that required ACA to post collateral if it fell below a rating threshold. ACA has publicly disclosed between $18 billion and $19 billion in exposure to collateralized debt obligations made up of asset-backed securities, which the CDS contracts guaranteed.

The Standard & Poor's downgrade created a situation where ACA would have had to post $1.7 billion in collateral, a sum it did not have.

The latest deal was confirmed by Karen Barrow, a spokeswoman for the Maryland Insurance Administration. ACA is domiciled in Maryland and subject to direct oversight by the regulator, which has agreed to withhold further action against the bond insurer while a forbearance agreement is in place.

ACA is working with financial adviser Blackstone Group to find a solution acceptable to all parties. In recent weeks, the company has removed most of its Web site from the Internet in favor of only a homepage.


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