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Moody's Cuts SCA's Rating
Moody's Slashes Rating on Security Capital Assurance, Threatening $150B in Debt
February 07, 2008: 04:01 PM EST
NEW YORK (Associated Press) - Moody's Investors Service cut its rating on Security Capital Assurance Ltd. on Thursday, imperiling the beleaguered bond insurer's prospects for new business and threatening the value of hundreds of billions of dollars in bonds.
Moody's cut Security Capital Assurance's financial-strength rating to "A3" from "AAA." The insurer's financial strength is now "high quality," whereas it was previously "maximum safety."
A bond insurer without top-caliber financial strength ratings will have trouble winning new business. Also, downgrades of a bond insurer are likely to drag the value of the bonds the company insures, because insured debt is only as safe as the reliability of its insurer.
Security Capital Assurance, based in Bermuda, writes insurance policies promising to repay bondholders when borrowers miss payments on their bonds. Moody's said in order to cover the claims the company is likely to face, Security Capital needs $6 billion in "claims-paying resources," or cash it can access. The company only has access to $3.6 billion, Moody's said.
Moody's expects to issue a list of SCA-insured bonds the ratings agency will downgrade because the company's balance sheet is not as sound. Security Capital insures $150 billion in debt.
After Fitch Ratings downgraded SCA, the ratings agency downgraded more than 37,500 bonds the company insures, including debt floated by government borrowers like the Bernards Township Board of Education in New Jersey and the Wayne County Public Library in Ohio.
The once-staid bond insurance industry used to insure mainly government bonds, which are relatively safe. Unsatisfied with the growth in this business, many insurers branched out to insure riskier debt, including some of the mortgage investments at the heart of the credit crisis gripping financial markets.
Because of expectations for higher claims, all three major ratings agencies have downgraded ACA Capital Holdings Inc., whose stock now trades for 70 cents.
Fitch has downgraded Ambac Financial Group Inc., SCA and Financial Guaranty Insurance Co., which collectively insure more than $1 trillion in debt. S&P has also downgraded FGIC.
Downgrades and the prospect for more have upended the bond insurance industry in the past year. Shares of MBIA Inc., which has not yet been downgraded, have tumbled more than 80 percent in the past year. Ambac's stock trades at less than $11, after topping $95 in May.
Shares of SCA gained 1 cent to $2.78 in afternoon trading Thursday. The stock has fallen more than 90 percent in the past year.
http://money.cnn.com/news/newsfeeds/articles/apwire/554633f738d364cf5ac860afb5b91465.htm
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Moody's Cuts SCA's Rating
Associated Press 02.07.08, 4:01 PM ET
NEW YORK -
Moody's Investors Service cut its rating on Security Capital Assurance Ltd. on Thursday, imperiling the beleaguered bond insurer's prospects for new business and threatening the value of hundreds of billions of dollars in bonds.
Moody's cut Security Capital Assurance's financial-strength rating to "A3" from "AAA." The insurer's financial strength is now "high quality," whereas it was previously "maximum safety."
A bond insurer without top-caliber financial strength ratings will have trouble winning new business. Also, downgrades of a bond insurer are likely to drag the value of the bonds the company insures, because insured debt is only as safe as the reliability of its insurer.
Security Capital Assurance, based in Bermuda, writes insurance policies promising to repay bondholders when borrowers miss payments on their bonds. Moody's said in order to cover the claims the company is likely to face, Security Capital needs $6 billion in "claims-paying resources," or cash it can access. The company only has access to $3.6 billion, Moody's said.
Moody's expects to issue a list of SCA-insured bonds the ratings agency will downgrade because the company's balance sheet is not as sound. Security Capital insures $150 billion in debt.
After Fitch Ratings downgraded SCA, the ratings agency downgraded more than 37,500 bonds the company insures, including debt floated by government borrowers like the Bernards Township Board of Education in New Jersey and the Wayne County Public Library in Ohio.
The once-staid bond insurance industry used to insure mainly government bonds, which are relatively safe. Unsatisfied with the growth in this business, many insurers branched out to insure riskier debt, including some of the mortgage investments at the heart of the credit crisis gripping financial markets.
Because of expectations for higher claims, all three major ratings agencies have downgraded ACA Capital Holdings Inc., whose stock now trades for 70 cents.
Fitch has downgraded Ambac Financial Group Inc., SCA and Financial Guaranty Insurance Co., which collectively insure more than $1 trillion in debt. S&P has also downgraded FGIC.
Downgrades and the prospect for more have upended the bond insurance industry in the past year. Shares of MBIA Inc., which has not yet been downgraded, have tumbled more than 80 percent in the past year. Ambac's stock trades at less than $11, after topping $95 in May.
Shares of SCA gained 1 cent to $2.78 in afternoon trading Thursday. The stock has fallen more than 90 percent in the past year.
http://www.forbes.com/feeds/ap/2008/02/07/ap4629325.html
Moody's Slashes Rating on Security Capital Assurance, Threatening $150B in Debt
February 07, 2008: 04:01 PM EST
NEW YORK (Associated Press) - Moody's Investors Service cut its rating on Security Capital Assurance Ltd. on Thursday, imperiling the beleaguered bond insurer's prospects for new business and threatening the value of hundreds of billions of dollars in bonds.
Moody's cut Security Capital Assurance's financial-strength rating to "A3" from "AAA." The insurer's financial strength is now "high quality," whereas it was previously "maximum safety."
A bond insurer without top-caliber financial strength ratings will have trouble winning new business. Also, downgrades of a bond insurer are likely to drag the value of the bonds the company insures, because insured debt is only as safe as the reliability of its insurer.
Security Capital Assurance, based in Bermuda, writes insurance policies promising to repay bondholders when borrowers miss payments on their bonds. Moody's said in order to cover the claims the company is likely to face, Security Capital needs $6 billion in "claims-paying resources," or cash it can access. The company only has access to $3.6 billion, Moody's said.
Moody's expects to issue a list of SCA-insured bonds the ratings agency will downgrade because the company's balance sheet is not as sound. Security Capital insures $150 billion in debt.
After Fitch Ratings downgraded SCA, the ratings agency downgraded more than 37,500 bonds the company insures, including debt floated by government borrowers like the Bernards Township Board of Education in New Jersey and the Wayne County Public Library in Ohio.
The once-staid bond insurance industry used to insure mainly government bonds, which are relatively safe. Unsatisfied with the growth in this business, many insurers branched out to insure riskier debt, including some of the mortgage investments at the heart of the credit crisis gripping financial markets.
Because of expectations for higher claims, all three major ratings agencies have downgraded ACA Capital Holdings Inc., whose stock now trades for 70 cents.
Fitch has downgraded Ambac Financial Group Inc., SCA and Financial Guaranty Insurance Co., which collectively insure more than $1 trillion in debt. S&P has also downgraded FGIC.
Downgrades and the prospect for more have upended the bond insurance industry in the past year. Shares of MBIA Inc., which has not yet been downgraded, have tumbled more than 80 percent in the past year. Ambac's stock trades at less than $11, after topping $95 in May.
Shares of SCA gained 1 cent to $2.78 in afternoon trading Thursday. The stock has fallen more than 90 percent in the past year.
http://money.cnn.com/news/newsfeeds/articles/apwire/554633f738d364cf5ac860afb5b91465.htm
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Moody's Cuts SCA's Rating
Associated Press 02.07.08, 4:01 PM ET
NEW YORK -
Moody's Investors Service cut its rating on Security Capital Assurance Ltd. on Thursday, imperiling the beleaguered bond insurer's prospects for new business and threatening the value of hundreds of billions of dollars in bonds.
Moody's cut Security Capital Assurance's financial-strength rating to "A3" from "AAA." The insurer's financial strength is now "high quality," whereas it was previously "maximum safety."
A bond insurer without top-caliber financial strength ratings will have trouble winning new business. Also, downgrades of a bond insurer are likely to drag the value of the bonds the company insures, because insured debt is only as safe as the reliability of its insurer.
Security Capital Assurance, based in Bermuda, writes insurance policies promising to repay bondholders when borrowers miss payments on their bonds. Moody's said in order to cover the claims the company is likely to face, Security Capital needs $6 billion in "claims-paying resources," or cash it can access. The company only has access to $3.6 billion, Moody's said.
Moody's expects to issue a list of SCA-insured bonds the ratings agency will downgrade because the company's balance sheet is not as sound. Security Capital insures $150 billion in debt.
After Fitch Ratings downgraded SCA, the ratings agency downgraded more than 37,500 bonds the company insures, including debt floated by government borrowers like the Bernards Township Board of Education in New Jersey and the Wayne County Public Library in Ohio.
The once-staid bond insurance industry used to insure mainly government bonds, which are relatively safe. Unsatisfied with the growth in this business, many insurers branched out to insure riskier debt, including some of the mortgage investments at the heart of the credit crisis gripping financial markets.
Because of expectations for higher claims, all three major ratings agencies have downgraded ACA Capital Holdings Inc., whose stock now trades for 70 cents.
Fitch has downgraded Ambac Financial Group Inc., SCA and Financial Guaranty Insurance Co., which collectively insure more than $1 trillion in debt. S&P has also downgraded FGIC.
Downgrades and the prospect for more have upended the bond insurance industry in the past year. Shares of MBIA Inc., which has not yet been downgraded, have tumbled more than 80 percent in the past year. Ambac's stock trades at less than $11, after topping $95 in May.
Shares of SCA gained 1 cent to $2.78 in afternoon trading Thursday. The stock has fallen more than 90 percent in the past year.
http://www.forbes.com/feeds/ap/2008/02/07/ap4629325.html
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