Fitch Ratings announced today that it has decided to maintain its
Insurer Financial Strength (IFS) and debt ratings on MBIA Inc. and its
subsidiaries for the foreseeable future. Fitch expects to maintain the
MBIA ratings as long as Fitch believes that it can maintain a clear,
well-supported credit view without access to certain non-public details
concerning MBIA's insured portfolio, to which Fitch will no longer have
access.
Commenting on Fitch's decision, Stephen W. Joynt, President and Chief
Executive Officer of Fitch Ratings, said: 'We are disappointed that MBIA
has requested that we withdraw our IFS ratings and that they have
decided to stop providing us important non-public information about
their portfolio. While we respect MBIA'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. The approach we are taking with MBIA is consistent
with the approach we have taken in other similar situations.'
Mr. Joynt continued: 'Fitch has discussed this situation with several
major investors, some of whom hold MBIA insured securities that are only
rated by Fitch, and we have concluded that maintaining the MBIA ratings
at this time is most appropriate for investors and causes the least
disruption to the marketplace. For example, several large money market
funds hold Tender Option Bonds rated by Fitch based on MBIA insurance.
If we withdraw our rating they may be forced sellers into a market
already challenged by liquidity issues. Maintaining a rating -- whether
AAA or even if downgraded to AA category -- continues the recognition of
the high quality of their investment.'
As announced by Fitch on Feb. 5, 2008, before Fitch received MBIA's
request to withdraw, the ratings of MBIA and its subsidiaries were place
on Rating Watch Negative. Fitch expects that its review of MBIA will be
completed in the course of the next few weeks. Currently, Fitch believes
that should the ratings of MBIA be changed as a result of this review,
MBIA's IFS ratings will be no lower than the 'AA' category, which
represents very strong capacity to meet policyholder and contract
obligations on a timely basis.
On March 7, 2008, MBIA publicly announced its request that Fitch
withdraw its IFS ratings. That request was communicated in a letter to
Fitch and received just prior to MBIA's public announcement. Fitch
subsequently confirmed with the company that MBIA would no longer
provide Fitch non-public details on its insured portfolio and may
participate in the rating process in a more limited manner than it has
participated to date.
In general, Fitch believes that they can rate companies based upon
publicly available information. The unique nature of the financial
guaranty sector makes maintaining the MBIA IFS and debt ratings more
challenging without access to the non-public details on their insured
portfolio. To Fitch's knowledge, the non-public details on MBIA's
insured portfolio currently made available to Fitch are not available
from any other source.
Accordingly, while Fitch has decided to maintain MBIA's ratings at this
time, it may become necessary to withdraw those ratings in the future.
Fitch expects that it will maintain MBIA's ratings for at least the next
few months, but can provide no assurance that the ratings will remain
outstanding beyond then.
Fitch's rating definitions and the terms of use of such ratings are
available on the agency's public site, www.fitchratings.com.
Published ratings, criteria and methodologies are available from this
site, at all times. Fitch's code of conduct, confidentiality, conflicts
of interest, affiliate firewall, compliance and other relevant policies
and procedures are also available from the 'Code of Conduct' section of
this site.
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