Moody's Downgrades MBIA, Ambac

Moody's Investors Service has downgraded key ratings of two mortgage-related bond insurers in the latest of a series of negative rating actions the two companies have protested. Moody's has downgraded MBIA's insurance financial strength rating from Aaa to A2 and Ambac's IFSR from Aaa to Aa3. Several related ratings are also being affected by the move, including some transactions the companies have insured. Regarding both companies, Moody's said that, among other concerns, "uncertainty about the ultimate performance of ... mortgage-related exposures continues to adversely affect market perceptions" of them, "greatly impairing" their "financial flexibility and ability to write new insurance." In protesting recent negative rating actions by Moody's and the other two major rating agencies, MBIA and Ambac have separately assured market participants that they have taken steps to offset their mortgage-related risks and that their capitalization and claims-paying ability are sound.