Moody’s cuts Radian to A2

Moody's Public Sector Europe said it downgraded Radian Group Ltd.’s long-term issuer rating and the long-term senior secured rating of Radian's SPV, Radian Capital plc, to A2 from A1.

The outlook is negative.

Moody’s said the downgrade reflects Radian's shift in strategy toward more commercial activities in its current business plan, its relatively weak liquidity position and an expected deterioration of interest cover ratios over the medium-term.

“Radian is expected to increase its exposure to market sales (first tranche shared ownership and outright sales) to a level we deem to be high (>20% of turnover) by FY2018 from 5.3% of turnover in FY2016, with exposure remaining high through FY2020,” the agency said in a news release.

“In addition, Radian is introducing a significant amount of outright sales to its market sales program, a tenure we consider to be the most risky and for which Radian has minimal experience.”

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