Moody’s downgrades MBIA, Ambac

Ratings firm Moody's Investors Service has slashed the ratings of guarantors MBIA Inc. and Ambac Financial Group Inc., both of New York. Moody’s of New York cut the AAA ratings of the two firms significantly, cutting the ratings of MBIA Insurance Corp. of New York to A2 from AAA. It also slashed the rating of MBIA Inc. to BAA2 from AA3, only a few steps above what is considered to be “junk.” MBIA Insurance Corp. is a subsidiary of MBIA Inc. Ambac’s subsidiary, Ambac Assurance Corp. of New York, also had its rating cut to A3 from AAA, and Ambac Financial Group Inc. was cut to A3 from AA3. A statement released by MBIA said that company officials were “disappointed” to learn of the decision and “baffled by [Moody’s] analysis.” MBIA’s statement also said that the company has $16 billion in resources to pay claims, and said that “we have more than enough capital to meet obligations to policyholders.” Ambac officials responded in a similar manner to the downgrade, expressing disappointment and noting in a statement that the company has “separately confirmed that the downgrade does not have any material impact on its obligations to collateralize its guaranteed investment contracts and the swaps in its financial services segment.”