Moody's Investors Service will not assign MBIA Insurance Corp.'s A2 rating to the approximately $166 billion portion of Financial Guaranty Insurance Co.'s U.S. public finance book that the financial guarantor has agreed to reinsure because the deal does not meet the rating agency's credit substitution standards, Moody's said in a special report earlier this week.

FGIC's ability to terminate the agreement without a final payment being made by MBIA prevents it from meeting Moody's requirements for substitution, Moody's said. FGIC could cancel the deal if MBIA becomes insolvent, falls below investment grade, or for a number of other reasons.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.