NEW YORK Nov 7 Moody's Investors Service on
Friday cut its ratings on MBIA Inc's (MBI.N) insurance arm and
also sent ratings on the holding company's debt into junk
territory, citing diminished business prospects and a weaker
Moody's cut bond insurer MBIA Insurance Corp two notches to
"Baa1," the third-lowest investment grade, and cut MBIA Inc's
debt two notches to "Ba1," one step below investment grade.
MBIA's business has suffered from "its exposure to losses
from U.S. mortgage risks and disruption in the financial
guaranty business more broadly," Moody's said in a statement.
Moody's said it also expects MBIA to have more losses from
mortgage related securities, and that losses may also spread to
other forms of debt it insures.
MBIA responded in a statement that it disagrees with the
downgrade, but said it will have little direct impact on the
"Our policy-holders and debt holders can rest assured that
we will meet our obligations to them on time and in full and
that we are doing everything we can to ensure that MBIA
weathers the current financial crisis," MBIA Chief Executive
Jay Brown said in a statement.
"In addition, as a result of the portfolio rebalancing that
we began in the second quarter, we have sufficient liquidity to
meet all termination payments due on our Guaranteed Investment
Contracts as a result of the downgrade," he said.
Moody's on Wednesday cut its ratings on MBIA's competitor
Ambac Financial Group ABK.N, sparking a cash shortfall at its
finance unit that required the transfer of assets from the
insurance arm to cover collateral needs.
(Reporting by Karen Brettell; Editing by Dan Grebler)