NY transit authority to backstop equipment leases

NEW YORK, Dec 17 (Reuters) - New York's Metropolitan Transportation Authority said on Wednesday it would pledge cash, Treasury bonds or other collateral to back four equipment leases that were guaranteed by bond insurers who were downgraded by rating agencies.

A number of leasing deals across the nation have been caught out by downgrades of the big bond insurers, which sent the deals into technical default.

The cost of allowing defaults "would be far in excess of cost of the actions," said a staff summary prepared for the agency board.

The mass transit agency could have replaced the insurers but that was too difficult in the current market.

"The one indication of interest the MTA received from a qualified insurer was at pricing that was not considered reasonable," the staff summary said.

Two leases, which date back to 2003, were done with arms of Bank of America (BAC.N) and the Bank of New York (BK.N). They were guaranteed by Ambac Financial Group's (ABK.N) bond insurer. The other two leases, from 1997, were done with First Hawaiian Leasing, and guaranteed by American International Group (AIG.N).

(Reporting by Joan Gralla; Editing by Chizu Nomiyama)