Fitch Ratings yesterday refused to withdraw the insurer financial strength rating for MBIA Insurance Corp., citing its ability to keep an accurate credit view of the company for at least the next several months.
Fitch will rely on publicly available portfolio information for MBIA, as the financial guarantor has ceased giving the rating agency access to proprietary data. After that, Fitch said, the specific nature of the financial guaranty industry will make it hard to obtain an accurate view without that information.
Fitch may eventually withdraw the rating, though it has rated companies based on publicly available information in the past, said Stephen Joynt, Fitch's chief executive officer.
The decision to continue rating MBIA was based in part on discussions Fitch had with a number of investors, including the managers of tender-option bond programs. The investors said that if Fitch were to withdraw its rating, those that hold MBIA-insured paper may be forced to sell into an already distressed market, Joynt said.
"Fitch has discussed this situation with several major investors," Joynt said. "We have concluded that maintaining the MBIA ratings at this time is most appropriate for investors and causes the least disruption to the marketplace."
MBIA Inc., the insurer's parent company, officially asked Fitch to withdraw its rating on March 7.
"We completely respect their right to maintain MBIA's ratings for a period of time," said C. Edward Chaplin, chief financial officer for MBIA. "We agree with Fitch that the unique nature of the financial guaranty sector makes maintaining the MBIA IFS and debt ratings more challenging without access to non-public information."
Fitch said it will complete its review of MBIA's insurer financial strength rating in the coming weeks. The current AAA rating is on negative watch. If a downgrade below AAA is necessary, the rating is unlikely to go below AA, according to Fitch.
