Moody's to Cut Ambac, MBIA AAA Rating

Thursday, June 05, 2008 | 08:30 AM

Looks like trouble for the monline duolines. Barring any further capital raise means a AA rating is inevitable:

The world's largest bond insurers said they won't raise capital after New York-based Moody's said yesterday that the most likely result of its examination would be a downgrade of the companies' insurance financial strength rankings.    

Moody's originally put Ambac and MBIA under review in January, only to affirm the ratings of MBIA a month later and Ambac in March. The credit rating company cited "meaningful uncertainty'' about Ambac's ability to regain market share since the first reviews, and "diminished new business prospects'' for MBIA in yesterday's announcement.    

Floyd Norris says No Kidding: "Has anyone thought in recent months that either of those insurers deserved its AAA rating?"

Update: June 5, 2008 3:55pm
Its official:

S&P cuts ratings on MBIA, Ambac   

Credit ratings agency Standard & Poor's said Thursday it cut the financial strength rating on bond insurers MBIA and Ambac Financial Group to "AA" from "AAA," a day after Moody's said it was considering doing the same thing.

S&P said it cut the crucial ratings because the pair face a decline in new business and financial flexibility. Fitch Ratings has already downgraded both MBIA and Ambac to "AA."


>

Sources:
MBIA, Ambac May Quit Aaa Battle on Moody's Likely Cut
Christine Richard and Jody Shenn   
Bloomberg, June 5 2008
http://www.bloomberg.com/apps/news?pid=20601087&sid=aGtCIF41PLkI&

No Kidding
Floyd Norris
NYT, June 4, 2008,  6:42 pm
http://norris.blogs.nytimes.com/2008/06/04/no-kidding/

Thursday, June 05, 2008 | 08:30 AM | Permalink | Comments (7) | TrackBack (0)
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Comments

So Barry, what are the ramifications? We all know it is coming.

A little look at the dollar:

a weaker dollar Y/Y added about 8% to foreign revenue in 4Q07...11% in 1Q08 and I estimate about 11% in 2Q. It is flattening out and I project 3Q it will be up only 8% and 4Q rough guess up 4%. If dollar does rally, it could turn negative in 6 months.

Posted by: Steve Barry | Jun 5, 2008 8:40:55 AM

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