Ambac and MBIA placed on review for downgrade

The two largest monoline insurers, Ambac and MBIA, have been placed on review for downgrade by Moody's Investors Service.

Ambac, rated Aa3 by Moody's, and MBIA, rated A2, are heavily dependent on maintaining their ratings for their CDS insurance business. The agency took the action as a result of a review of the cumulative loss projections assigned to subprime RMBS.

The previous estimated loss on 2006 vintage subprime RMBS was in a 14-18% range, but the rating agency now applies a 22% assumption

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