Fitch puts Financial Security on watch

Fitch Ratings said it placed the ratings of Financial Security Assurance and Financial Security Assurance Holdings Ltd. on Rating Watch negative, including the AA rating on the holding company's $100 million 5.6% senior notes due 2103, $230 million 6¼% senior notes due 2102 and $100 million 6 7/8% senior notes due 2101 and the AA- rating on its $300 million junior subordinated debentures.

The agency said this action reflects developments at parent company Dexia SA, which have potential implications for Financial Security's capitalization and liquidity support, and continued challenges to Financial Security's core franchise.

Historically, Dexia has demonstrated a strong financial and strategic commitment to Financial Security, and its ability to provide additional capital and liquidity support was strengthened following Dexia's recent recapitalization and explicit sovereign statements guaranteeing Dexia's institutional obligations, Fitch said.

That being said, the change in ownership and management creates some uncertainty as to Dexia's willingness to provide future support and the nature of that support, the agency added.

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