Rating agencies are poised to downgrade MBIA and Ambac, possibly as early as today.
So says CNBC’s Charlie Gasparino anyway.
Which would, of course, rather outdate Eric Dinallo’s plan to save the monolines – reported by the FT last week.
Noone wants a downgrade, but at the same time, people will feel cheated if they don’t get one: and another stay would certainly diminish people’s trust in the rating agencies. It’s perhaps with that in mind, that Moody’s and S&P are catching up with Fitch’s position- monolines are not AAA institutions.
Says CNBC:
The ratings agencies realize they’re walking a tight rope — if they downgrade the insurers, they could expedite their demise. On the other hand, if they follow New York’s request and don’t downgrade, they’re in essence violating their duty to downgrade bonds on objective criteria.
Moody’s downplayed the likelihood of striking a deal with New York, however. A spokesman for the ratings agency confirmed that Moody’s has had conversations with the Insurance Department, but said “we don’t forbear on our ratings” based on talks with government officials.