Friday, March 28, 2008

S&P cuts FGIC to Junk

by Calculated Risk on 3/28/2008 08:01:00 PM

From Reuters: S&P cuts FGIC insurance unit's rating to junk status

S&P cut FGIC Corp by six notches to "B," five steps below investment-grade, from "BBB." It downgraded FGIC's insurance arm, Financial Guaranty Insurance Co, by six notches to "BB," two steps below investment grade, from "A."

The outlook is negative
This was expected (Fitch cut FGIC to junk on Wednesday), and FGIC will probably be in run-off (they've already stopped writing new business). Unlike insurers AMBAC and MBIA, FGIC was unable to raise new capital.