Moody’s issued the weakest warning it could about the two big monolines. Most observers did not expect the bond insurers’ last round of fundraising to carry them very far, and that view appears to be playing out on schedule. We may be moving towards a repeat the January-February drama, with the rating agencies saber rattling until the bond guarantors raise enough money to tide them over for another bit.
MBIA Inc. and Ambac Financial Group Inc. had “meaningfully” higher losses on home-equity loans and collateralized debt obligations than anticipated, raising concern about their Aaa status, Moody’s Investors Service said.
The losses elevate “existing concerns about capitalization levels relative to the Aaa benchmark,” Moody’s said in a statement today. MBIA and Ambac tumbled in New York Stock Exchange composite trading.