Cal-Mortgage Insurer Rating Lowered

The insurer financial strength rating of Cal-Mortgage Loan Insurance Division has been lowered from A to BBB by Fitch Ratings based on its recent downgrade of the state of California's general obligation bonds from A to BBB.The rating remains on Rating Watch Negative, Fitch said. Cal-Mortgage, a division of the California Office of Statewide Health Planning and Development, guarantees chiefly nonrated and below-investment-grade health care credits that demonstrate community need. Fitch said the agency's rating is dependent on the state's because, if defaults deplete the state's Health Facility Construction Loan Insurance Fund, the state treasurer is required to issue debentures on parity with the state's general obligation bonds. The debentures would be in the amount of principal and interest due but not paid, and at a payment schedule and coupon rate identical to those of the defaulted bonds, the rating agency said. Fitch can be found online at http://www.fitchratings.com.