MBIA loses AAA rating
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- June
- 5
Standard & Poor’s Rating Services cited continuing weakness in the U.S. housing market as a major factor in its move to lower its financial strength rating on MBIA Inc. to AA from AAA.
It was the latest blow for MBIA, an Armonk-based bond insurer that has suffered record losses resulting from its exposure to a housing market mired in its worst slump in 25 years.
Standard & Poor’s said that the downgrade reflects concerns that MBIA will face a drop in new business and “declining financial flexibility†as the downturn in housing plays out. Analysts have said that a rating downgrade could be a serious concern for MBIA as it looks to maintain the confidence of investors and write new business in its core market of insuring municipal bonds.
Jay Brown, MBIA chairman and chief executive officer, said he remains confident in MBIA’s prospects.
“We will engage in discussions with S&P to better understand the basis for their decision,†Brown said in a written statement. “In the coming weeks, we will work with our board of directors to thoroughly examine all of our options as we further the transformation of the company with the goal of delivering long-term value to our shareholders.”
The downgrade by S&P came a day after Moody’s Investors Service announced that it was placing the credit rating of the company under review for a potential downgrade.
This entry was posted
on Thursday, June 5th, 2008 at 5:31 pm by Jay Loomis.
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