Moody's Downgrades MBIA, Ambac

Moody's Investors Service downgraded bond insurers MBIA(MBI Quote) and Ambac Financial(ABK Quote) on late Thursday, dealing the companies a serious blow to their future viability.

Moody's cut the financial strength rating for MBIA to A2 and Ambac to Aa3. Both companies had held a pristine triple-A rating. The ratings agency, which had earlier this month put MBIA and Ambac on warning for possible downgrade, also issued negative outlooks for both insurers.

The downgrades are the third from the three major credit ratings agencies for the firms, which rely on pristine credit to insure corporate and municipal debt. Standard & Poor's earlier this month cut its ratings and Fitch Ratings did so earlier this year. ...