S&P: Monoline Problems to Have ‘Limited Impact’ on Japanese Financial Institutions

February 5, 2008

Standard & Poor’s Ratings Services indicated that “any further deterioration in the credit quality of monoline insurance companies will generally have limited impact on Japanese financial institutions, if such deterioration remains within expectations.”

In a detailed analysis of the ongoing problems bond (monoline) insurers are facing S&P said that “even if losses are recorded by individual institutions, we assume that these will not be significant enough to prompt ratings revisions at this time.”

However, S&P did warn that “any extended deterioration in the U.S. housing market will negatively impact financial institutions that possess subprime-related assets, although they currently retain the strength to manage the situation.

“If the market becomes increasingly uncertain due to the downgrade of the monoline insurers, leading to a decline in share prices and the broader economy, the ratings or outlooks on Japanese financial institutions may be affected.”

Source: Standard & Poor’s – www.standardandpoors.com

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