Some of the cloud over MBIA was removed today as Standard and Poor’s affirmed its AAA. However, the number one bond insurer still has a negative outlook. The AAA for Ambac was also affirmed based on its capital raising plan and likelihood of being able to implement that plan. However, it remains on review for possible downgrade.
Standard & Poor’s on Monday ended its downgrade review for MBIA Corp’s top “AAA” rating, citing success by the largest U.S. bond insurer in raising new capital.
The action reflects the company’s ability to successfully access $2.6 billion in extra capital that can be used to pay claims, S&P said in a statement.
The outlook is negative, indicating a rating cut may still be likely over the next two years.
The “AAA” ratings of Ambac Financial Group were “affirmed,” based on S&P’s assessment of the company’s capital-raising plans and ability to implement its plans.
Ambac remains on review for downgrade, however, “to reflect uncertainty surrounding the risk profile and capitalization plans for the reported new corporate structure being contemplated by the holding company,” S&P said.
The “AAA” ratings of XL Capital Assurance Inc, part of Security Capital Assurance (SCA.N: Quote, Profile, Research), meanwhile were cut six notches to “A-minus,” and remain under review for further downgrades.
Financial Guaranty Insurance Co’s ratings were also cut to “A,” the sixth-highest investment grade, from “AA” and remain on review with developing implications, meaning they may be raised, lowered or affirmed.