MBIA slumped 13% to $5.84 after a Moody's warning. Rival Ambac dropped 17% to $2.48. MBIA has weak new business prospects, little financial flexibility and may suffer higher losses on guarantees its main insurance subsidiary sold on mortgage-backed securities and more complex but related vehicles known as collateralized debt obligations, or CDOs, Moody's said in a statement. The agency put the Aaa ratings of MBIA's main bond insurance unit on review for a possible downgrade. The most likely outcome of the review will be a downgrade to the Aa range. But Moody's also warned that it could cut MBIA to single A.
Does anybody trust the rating agencies anymore? Is there anything in Moody's statement that wasn't true four months ago? How can MBIA and Ambac still have Aaa ratings?
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment