If the ratings agencies do in fact lower the rating of ACA Financial Guaranty, the ratings on the bonds guaranteed by ACA will follow, said agency sources.

Though most, if not all, of ACA insured asset-backeds are private placements, according to the company's third quarter investor report, ACA has exposure to United National Home Loan Owner Trust 1999-1A, Keystone Owner Trust 1998P2 M1, Goleta National Bank 1999-1.

Additionally, Standard & Poor's noted in one report that ACA has exposure to deals serviced by Advanta Mortgage Corp., although the issuers and trust names on those deals are unidentified.

Established in 1997, ACA is the only single-A bond insurer in the asset-backed market. The company does most of its business in the municipal/project finance arena.

According to published reports, ACA currently insures approximately $5.4 billion in bonds, $1.7 billion of which are asset-backeds.

Last week Fitch announced that it had placed ACA on ratings watch negative, following S&P announcement earlier in January. ACA's problems date back to March 2000, when Fitch originally announced its concerns with ACA's capital levels. Since that time, ACA has made a series of arrangements to secure funding.

ACA "remains optimistic that additional capital will become available in the near term," the company said in a release.

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