Moody's May Cut Ambac & MBIA AAA Rating

Moody's Investors Service said it will likely cut the insurance unit ratings of MBIA and Ambac...

to AA or A range, because of the firms' credit profiles and constrained new business prospects.

Moody's said MBIA's recent mortgage performance data and its Q1 results are indicative of continued deterioration within the guarantor's insured portfolio.

Moody's will evaluate the effect that mortgage-related stress, particularly on MBIA's 2nd lien mortgage

and CDO collateralized debt obligation exposures, could have on the firm's risk adjusted capital adequacy position.

As for Ambac, Moody's noted concerns about the deterioration in the company's financial flexibility since

its $1.5 billion capital raise in March based on the substantial decline in its market capitalization and high current spreads on its debt securities.

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