Standard & Poorâ€™s Rating Services yesterday affirmed its AA financial-strength rating of MBIA Inc., and removed the rating from credit watch negative.
S&Pâ€™s outlook for the troubled Armonk-based bond insurer is negative, S&P said.
â€œWe assigned a negative outlook to MBIA due to its significant exposure to domestic nonprime mortgages and related exposures,â€ S&P credit analyst David Veno said in a statement.
Removal of the negative outlook, Veno said, â€œwill depend on clarification of ultimate potential losses as well as future business prospects.â€
The possibility of new regulations and the outcome of MBIAâ€™s business decisions are also factors, he said.
Shares of MBIA Inc. tumbled 13 percent today after Moodyâ€™s Investor Service stripped the struggling Armonk-based bond insurer of its prized Aaa rating, Moodyâ€™s highest.
Moodyâ€™s downgraded MBIAâ€™s rating two notches to A2. Moodyâ€™s also downgraded the rating for MBIA rival Ambac Financial Group Inc. one step to Aa.
The move, taken late Thursday, followed similar actions by Fitch Ratings and Standard & Poorâ€™s.
â€œMBIAâ€™s insured portfolio remains vulnerable to further economic deterioration,â€ Moodyâ€™s said in a statement. â€œThe outlook for the ratings is negative, reflecting the material uncertainty about the firmâ€™s strategy and the … likelihood of further adverse developments in its insurance portfolios or operations.â€
MBIA has recorded heavy losses largely due to its exposure to the weak housing market and a troubled market for subprime mortgages to riskier borrowers.
For its part, MBIA said yesterday that it was â€œdisappointedâ€ by Moodyâ€™s decision, saying it was â€œbaffledâ€ by the ratings agencyâ€™s analysis.
â€œWe believe the fundamentals of the company support a higher rating,â€ MBIA said.
MBIA shares ended the weekâ€™s trading down 86 cents to $5.59 each. The stock has fallen more than 91 percent in the last year.
Fitch Ratings said that it will continue rating the financial strength and debt of MBIA Inc., the Armonk-based bond insurer. MBIA sparked controversy earlier this month when it asked Fitch to quit rating the company because of a dispute over Fitchâ€™s methodology.
MBIA has suffered heavy losses stemming from its exposure to subprime mortgages.
â€œWe are disappointed that MBIA has requested that we withdraw our (insurer financial strength) ratings and that they have decided to stop providing us important non-public information about their portfolio,â€ Stephen W. Joynt, president and chief executive officer of Fitch Ratings, said in a written statement. â€œWhile we respect MBIAâ€™s decision not to provide us that information, we trust that they will respect our decision to continue to maintain a rating on MBIA, a company about which many investors are so clearly interested.â€
C. Edward Chaplin, chief financial officer of MBIA, said that Fitch may have problems continuing its ratings.
â€œDue to market developments, we believe that the non-public information currently in Fitch’s possession soon will become out of date, and public information alone will be insufficient to maintain the ratings,â€ Chaplin said in a written statement.
Standard & Poorâ€™s Ratings Services lowered its ratings on Readerâ€™s Digest Association Inc.â€™s corporate credit rating to â€œB-â€ from â€œB,â€ and revised its outlook on the venerable publisher to stable from negative, the bond-rating company said yesterday.
Standard & Poorâ€™s cited the Chappaqua-based publisherâ€™s higher debt levels, lower earnings and negative cash flow as reasons for the downgrade.
S&P also expressed concern regarding managementâ€™s ability to stem business declines at its school and educational services operations, complete restructuring initiatives and resume profitability growth over the near term.
S&P noted Readerâ€™s Digest total debt as of Dec. 31 was $2.08 billion.