Last Friday, Moody's Investor Service announced the results of its review of the financial guarantors. Ambac, Assured Guaranty and FSA have been affirmed at 'Aaa' with a stable outlook; CIFG and MBIA have been affirmed at 'Aaa' with a negative outlook; XL Capital and FGIC have been put on review for downgrade; and Radian Asset Assurance has been affirmed at 'Aa3' with stable outlook. These rating announcements result from Moody's reassessment of the financial guaranty insurers' capital adequacy in the context of higher-than-expected losses from credit enhancement provided to RMBS and ABS CDOs that include exposure to troubled RMBS deals.The agency's rating actions stem from its assessment that several of the guarantors still have appropriate levels of capitalization to support the current rating and those that may not are taking active steps to strengthen their position, said Moody's Managing Director Jack Dorer. "In the cases in which we moved to a negative outlook or have initiated a review for possible downgrade, capitalization currently falls below 'Aaa' levels or could fall under that level in one of our stress cases," he added Dorer added that the agency plans to focus on both the effectiveness of these companies' capital remediation plans and their risk management strategies. As a result of these reviews, the Moody's-rated securities that are "wrapped" or guaranteed by FGIC and XL Capital Assurance are also placed under review for possible downgrade.

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