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Fitch Cuts Ratings on SCA-Backed Deals

Fitch Lowers Ratings on 10 Classes of Asset-Backed Securities Insured by Security Capital

January 24, 2008: 02:16 PM EST


NEW YORK (Associated Press) - Credit rating agency Fitch Ratings said Thursday it downgraded 10 classes of asset-backed securities tied to its downgrade of bond insurer Security Capital Assurance Ltd.

The ratings on the classes of securities were cut to "A" from "AAA" to match an earlier downgrade of Security Capital.

Fitch cut Security Capital's rating to "A" from "AAA" earlier Thursday, only a day after Security Capital scrapped plans to raise $2 billion in fresh capital to cover future potential claims.

All the securities downgraded remain on a negative watch, which means further downgrades are possible. Each was insured by XL Capital Assurance Inc., a financial guaranty subsidiary of Security Capital.

Shares of Security Capital tumbled 80 cents, or 21.1 percent, to $2.99 in afternoon trading

http://money.cnn.com/news/newsfeeds/articles/apwire/e1ee780fe7980aa741a5f3fd4dfd5bc5.htm

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Fitch Downgrades SCA-Insured Bonds

Associated Press 01.29.08, 3:55 PM ET

NEW YORK - Fitch Ratings cut its rating on more than 37,500 municipal bonds on Tuesday because of doubts about the insurer pledging to cover losses on the bonds.

Five days ago, Fitch Ratings downgraded Security Capital Assurance Ltd. (nyse: SCA - news - people ), a bond insurer based in Bermuda. Security Capital had abandoned plans to raise $2 billion to fortify its capital cushion, and Fitch said this dented the insurer's capacity to pay claims.

SCA writes insurance policies promising to repay bondholders when bond issuers default.

Because SCA's financial strength is not as sound, Fitch said, many of the bonds the company insures are not as safe. SCA insures more than $150 billion in debt.

Fitch downgraded 37,541 bonds insured by SCA's subsidiary, XL Capital (nyse: XL - news - people ) Assurance Ltd. The bonds include debt floated by such local government entities as the Bernards Township Board of Education in New Jersey, the Comanche County Consolidated Hospital District in Texas and the Wayne County Public Library in Ohio.

The market value of these bonds is likely to fall in the wake of the downgrade because of a greater implied risk of default. Fitch did not disclose the principal value of the downgraded bonds.

http://www.forbes.com/feeds/ap/2008/01/29/ap4588380.html