Moody's reviews Ambac, MBIA

Moody's Investors said it placed on review for downgrade Ambac Financial Group, Inc.'s senior unsecured debt rating of A3, junior subordinated debt of Baa1 and provisional rating on preferred stock of (P)Baa2.

Also on review are MBIA Inc.'s senior unsecured debt rating at Baa2, provisional senior debt rating at Baa2, provisional subordinated debt rating at Baa3 and provisional preferred stock at Ba1.

The action follows Moody's upward revision to cumulative loss projections for subprime mortgage-backed security exposures, according to the agency.

Reviews will focus on the impact of increasing cumulative loss rate projections on each guarantor's mortgage-related exposures and risk-adjusted capital position, Moody's said.

Because the issuers are meaningfully exposed to the risk of U.S. subprime mortgages and other residential mortgage products, the agency said revised assumptions are expected to have a significant impact on the firms' capital positions and that multi-notch downgrades are possible.

S&P cuts International Lease

Standard & Poor's said it lowered the preferred stock of International Lease Finance Corp. (A-/Watch developing/A-1) to B from BBB, following a downgrade on the preferred stock of ultimate parent American International Group Inc. (A-/Watch developing/A-1) and its other subsidiaries.

The watch implications on the preferred stock are revised to negative from developing.

Under the terms of the Federal Reserve Bank of New York $85 billion borrowing facility for AIG, S&P said the U.S. government may veto dividends on any preferred shares. Any action on that right is uncertain but could occur with little warning at the government's discretion, the agency noted.

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