Moody's Investors Service last week downgraded domestic deals in Mexico wrapped by FGIC to Aa3.mx' from Aaa.mx.' While the agency had downgraded monoline-wrapped emerging-market deals on its global currency scale before last week, this move marked the first time Moody's lowered the rating on wrapped deals on Mexico's national scale. GMAC Financiera is the originator of the deal, which is
Moody's has a system for mapping the national and global scale ratings. In the case of Mexico, which as a sovereign is rated Baa1', the Aaa.mx' and Aa1.mx' ratings are analogous to a global scale rating of Baa1'. That means that if a monoline were to fall to Baa1', the national scale rating would have to be reassessed and possibly lowered. The agency had dropped FGIC to Baa3' on the global scale before announcing its downgrade of the GMAC deals.
Fitch Ratings had, the previous week, cut its national scale rating on the two FGIC-wrapped deals to AA+(mex)', following its downgrade of FGIC's global scale rating to BBB'.
The transactions in question were issued in 2007 and 2006. The wrapped portion of the 2006 deal amounted to 178 million inflation-index units (UDIs) ($67 million) and marked FGIC's first public guaranty in the local market. Credit Suisse was the lead.
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