The New York Times-20080125-Security Capital Gets Downgrade From Fitch
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Security Capital Gets Downgrade From Fitch
Shares of bond insurers opened strongly Thursday on hopes of a bailout for the beleaguered sector, but ended up falling sharply after Fitch Ratings downgraded Security Capital Assurance.
The downgrade renewed fears that the bond insurers might have difficulty meeting their obligations even before a bailout could be organized.
Shares of Security Capital tumbled 30.6 percent, to $2.63, after Fitch cut its financial strength rating to A from AAA. Ambac Financial Group shares dropped 17.3 percent, to $11.33, and MBIA shares plunged 13.3 percent, to $14.40.
Security Capital was downgraded after it abandoned plans to raise $2 billion, citing difficult market conditions.
Bond insurers generally need a AAA rating to generate new business. Rating cuts also affect debt they have insured and can potentially raise borrowing costs for cities and other institutions.
Regulators met with about a dozen banks Wednesday to brainstorm a rescue for the sector.
