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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Giordano Bruno who wrote (114838)	4/4/2008 2:39:52 PM
From: patron_anejo_por_favor	Read Replies (2) \| Respond to of 306849

By whom? Apparently the market doesn't care Fitch no more....<NG>

To: Giordano Bruno who wrote (114838)	4/4/2008 3:41:00 PM
From: ChanceIs	Read Replies (1) \| Respond to of 306849

Fitch Cuts AAA Rating on MBIA By JOHN FLOWERS April 4, 2008 3:06 p.m. Fitch Ratings stripped the treasured AAA rating from bond insurer MBIA Insurance Corp., saying the company's claims-paying ability no longer warrant MBIA having the top credit rating from the firm. The move comes amid an ongoing fight between Fitch and MBIA over Fitch's recently changed ratings models. As a result, MBIA asked Fitch a month ago to pull ratings, saying it disagreed with the ratings company's approach. Fitch ultimately declined to do so. Fitch, which warned of a possible downgrade in February, said MBIA's claims-paying resources of $16 billion as of Dec. 31 now fall below Fitch's AAA capital targets by $3.4 billion to $3.8 billion, "but are consistent with Fitch's updated standards" for a AA rating. Taken into consideration was the $2.6 billion in capital raised by MBIA this year. "We respectfully disagree with Fitch's conclusions," said MBIA Chief Financial Officer C. Edward Chaplin. "MBIA has a balance sheet that is among the strongest in the industry with over $17 billion in claims-paying resources, and has a high quality insured portfolio, factors which we believe enable MBIA to meet severe economic stress scenarios." Fitch sees a possible return to a AAA rating in MBIA's future thanks to, among other reasons, its exit from "riskier capital intensive structured finance businesses," and that its six-month underwriting suspension will help MBIA build capital. However, Fitch said that assuming subprime risk can be stabilized, it does not believe it will be possible for MBIA to significantly improve its credit profile until the company "can more fully reestablish momentum in the financial guaranty market," especially in the core U.S. municipal finance sector - an area Fitch said MBIA had exhibited a renewed focus. Fitch said MBIA has a $30.1 billion exposure to collateralized debt obligations and that losses "will ultimately fall within a range" of $3.1 billion to $4.9 billion. Bond insurers agree to pay principal and interest when due in a timely manner in the event of a default. It's a $2.3 trillion business that offers a credit-rating boost to municipalities and other issuers that don't have AAA ratings. Without those top ratings, their business models may be imperiled. MBIA and other bond insurers have been raising capital after expanding into structured finance in recent years. As losses have climbed on the loans underpinning these securities, investors have become concerned that bond insurers may have to pay claims, eating into capital. Rating agencies have warned that they may downgrade bond insurers' AAA ratings if the companies don't boost capital soon.