Moody's Investors Service announced today that the Aaa financial strength rating of Bermuda-based Channel Reinsurance Ltd., which provides coverage for troubled bond insurer MBIA, is on review for downgrade.
At the same time, Moody's also placed on review for downgrade the Aa3 rating assigned to contingent capital securities issued by Two Rock Pass Through Trust, a related financing trust, which provides backup for Channel Re.
Moody's said financial guaranty reinsurer has reinsured a broad range of risks from Armonk, N.Y.-based MBIA, including recent vintage second-lien mortgage securitizations, as well as significant amounts of asset backed securities (ABS) and collateralized debt obligations (CDOs) containing such exposures.
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