Moody's cuts MGIC debt rating, may cut again

NEW YORK, March 20 (Reuters) - Moody's Investors Service on Thursday cut its rating on MGIC Investment Corp (MTG.N), the largest U.S. mortgage insurer, and said it may cut them again, citing higher debt levels and the company's fourth quarter loss.

MGIC last month posted a much larger-than-expected $1.47 billion quarterly loss as more homeowners fell behind on payments, and claims increased sevenfold. For details, see [ID:nN13326058]

The company also said on Tuesday it plans raise about $675 million through a secondary offering and private placement of debt securities. The insurer expects to raise $350 million in the public offering, and an additional $325 million in the private placement.

"The downgrade also reflects the main operating company's reduced capacity to upstream dividends to the holding company," which services MGIC's debt, Moody's said in a statement.

In addition, the company has fully drawn its $300 million bank line, so it can't be used to back up the company's undrawn commercial paper program, Moody's said.

Moody's cut MGIC's senior debt one notch to "A2," the sixth highest investment grade, from "A1."

(Reporting by Karen Brettell; Editing by Chizu Nomiyama)