The landscape of the municipal bond insurance industry shifted yesterday, as MBIA Insurance Corp. and Ambac Assurance Corp. were downgraded to AA mere hours after Macquarie Group, the Australian investment bank and infrastructure specialist, was reported to be planning to start a bond insurer.

In downgrading two of the largest bond insurers, Standard & Poor's cited the insurers' lack of new business prospects, poor financial flexibility, and the further declining of the residential mortgage market. The rating agency placed the insurers' ratings on negative watch.

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