Moody's downgrades FGIC, units

Moody's Investors Service said it downgraded to B1 from Baa3 the insurance financial strength ratings of the main operating subsidiaries of FGIC Corp., including Financial Guaranty Insurance Co. and FGIC UK Ltd.

In the same rating action, Moody's also downgraded the senior debt ratings of FGIC Corp. to Caa2 from B3 and the contingent capital securities ratings of Grand Central Capital Trusts I-IV to B3 from B2.

Moody's cited the company's severely impaired financial flexibility and its proximity to minimum regulatory capital requirements relative to expected case losses.

The outlook is negative.

As FGIC's ratings are downgraded below the investment-grade level, Moody's will withdraw ratings on FGIC-wrapped securities for which there is no published underlying rating.

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