Fitch Ratings yesterday downgraded Financial Guaranty Insurance Co. to BBB from AA, citing limited liquidity as a result of the bond insurer's exposure to the subprime market. The outlook is negative.

According to Fitch, FGIC has $5 billion of claims-paying resources, an amount below capital guidelines for single- to triple-A ratings. The bond insurer would need to increase its liquidity by $5.1 billion to $5.3 billion to fall within a AAA rating and $800 million to $1.7 billion to fall within an A rating, Fitch said.

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