Moody’s Negative on MBIA Insurance

Moody’s Investors Service yesterday changed its outlook on MBIA Insurance Corp.’s B3 insurer financial strength rating to negative from developing Thursday.

In addition, Moody’s confirmed the Baa1 rating on National Public Finance Guarantee Corp. — formerly MBIA Insurance Corp. of Illinois — with a developing outlook. National had previously been on review for a possible upgrade.

The rating agency also downgraded the senior debt of MBIA Inc. to Ba3 from Ba1. The outlook is negative.

Moody’s said the rating actions reflect further expected insured portfolio deterioration at MBIA Insurance Corp. and uncertainty stemming from ongoing litigation challenging MBIA’s recent restructuring.

“The confirmation of National’s rating with a developing outlook, despite its strong capital profile and operational infrastructure, reflects the uncertainty caused by ongoing litigation challenging the recent restructuring of the group, and the extended timeframe over which such uncertainty may persist,” Moody’s said in a statement.

Moody’s confirmed the ratings of securities wrapped by National and reinsured municipal securities of MBIA Insurance Corp., unless they have higher published underlying ratings.

Moody’s also said the policies of Financial Guaranty Insurance Co. reinsured by National were unaffected by the rating action as the reinsurance agreement did not qualify for credit substitution under Moody’s methodology because it allows FGIC to terminate the agreement without a final payment being made by MBIA.

For reprint and licensing requests for this article, click here.
MORE FROM BOND BUYER