Thursday afternoon, Fitch Ratings responded to MBIA's news by putting the company's credit ratings on "watch for a possible downgrade." The agency notes that MBIA comes up short of a triple-A credit rating by about $1 billion of capital due to CDO downgrades, and that's including the recent $1 billion investment in MBIA by private equity firm Warburg Pincus.
Fitch essentially gives the firm four to six weeks to "obtain further capital commitments and/or put in place reinsurance or other risk mitigation measures." Fitch says it expects to downgrade the firm to double-A-plus if it cannot come up with the capital in time. According to a Reuters report, MBIA insures the most bonds, guaranteeing $673 billion. Ambac is second, insuring $556 billion.- Loading Comments...
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