Sell Side

Fitch Withdraws Ratings for MBIA, Ambac

WASHINGTON - Fitch Ratings announced yesterday that it is withdrawing all of its outstanding ratings on MBIA Inc., Ambac Financial Group Inc., and their subsidiaries following requests from the two insurers to withdraw the ratings.

Fitch said in a statement that the companies stopped providing the non-public information needed to assign ratings and had discontinued dialogue with Fitch analysts. Ambac asked Fitch to withdraw its rating on June 18 and MBIA made a similar request in March.

"Credit risk developments continue and Fitch's ability to analyze credit strength needs to shift to utilizing public information only," the company said in a statement.

Both MBIA and Ambac, among the largest insurance issuers for municipal bonds, were downgraded from triple-A ratings and given a negative outlook by Fitch earlier this year. Moody's Investors Service and Standard & Poor's followed with their own downgrades, but the complete withdrawal by Fitch indicates the insurers do not want to be associated with the rating agency's more conservative capital adequacy model, said Rob Haines, senior analyst with CreditSights Ltd.

Both MBIA and Ambac requested to have Fitch stop rating them "to silence" the agency, Haines said in an e-mail. The break ends an ongoing argument between Fitch and the insurance companies over the capital model Fitch uses to assign ratings. The insurers argued that Fitch was requesting too much unnecesesary information.

"Fitch's action [yesterday] is consistent with our request for withdraw and we appreciate their service to us in the past." MBIA said in a statement.

Fitch's decision is not unprecedented, the agency in May withdrew its ratings on Radian Group Inc., including those of the financial guarantor subsidiary, Radian Asset Assurance, in a response to Radian's request last September to have the ratings of the monoline bond insurer removed.


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