Fitch cuts MGIC ratings further into junk
NEW YORK, Oct 29 (Reuters) - Fitch Ratings on Thursday cut the credit ratings of Mortgage Guaranty Insurance Corp (MTG.N) further into "junk" status, citing concerns about the insurer's liquidity.
The agency cut MGIC's long-term issuer ratings by one notch to B-minus, six notches below investment grade. Fitch also downgraded MGIC's insurer financial strength to BB-minus, three notches into junk status.
The outlook for both ratings is negative, it said in a report.
"The downgrades are driven primarily by Fitch's concern regarding capital adequacy, business continuity and holding company liquidity," said analyst Davie Rodriguez, lead author of the report.
Earlier this month, MGIC, the largest U.S. mortgage insurer, posted a wider-than-expected quarterly loss, as more people failed to repay their home loans. For more, click on [ID:nBNG506601].
"The ability of the operating company to continue to write new business remains uncertain," said Fitch, although "recent developments indicate progress on that front."
The agency also has mid- to long-term liquidity concerns regarding MGIC's holding company because of bonds that mature in 2011 and 2015.
The outlook will remain negative until the rate of mortgage delinquencies either stabilizes or shrinks, and the company can then build an adequate level of cash reserves.
(Reporting by Tom Ryan; Editing by Chizu Nomiyama)
