Financial Security Assurance and Assured Guaranty have both been placed on negative ratings watch by Moody’s. But the potential downgrades are a result of the bond insurers’ ability, or lack thereof, to compete for new business, rather than because of concerns about capital adequacy.
This is a new approach for the ratings agency, away from a purely quantitative assessment and incorporating qualitative methodology, and the monolines are less than pleased.
"We believe that it is important for investors to know that Moody’s action is not at all reflective of a deterioration in Assured’s capital base, credit exposures or earnings outlook," said Dominic Frederico, president and chief executive of Assured Guaranty, in a statement.