FGIC May Get Capital After Natixis Rescues Bond Unit

Financial Guaranty Insurance Co., the insurer for $315 billion of bonds, may get the capital it needs to avoid losing top credit rankings after French banks bailed out competitor CIFG Guaranty, Fitch Ratings said.

FGIC, controlled by PMI Group Inc., Blackstone Group LP, and Cypress Group, has at most three weeks to show it deserves AAA grades, Fitch analyst Thomas Abruzzo said in an interview yesterday from New York. Groupe Banque Populaire and Groupe Caisse d'Epargne agreed to take control of CIFG yesterday from their Natixis banking subsidiary and doubled the company's capital with a $1.5 billion investment.

``They'll do whatever is necessary to protect their ratings and their franchise,'' Abruzzo said of the companies. Fitch says New York-based FGIC, the fourth-largest debt guarantor, is the most vulnerable in the industry.

FGIC helped borrowers from the New York Yankees to the Alaska Railroad Corp. sell AAA bonds. Mounting downgrades of insured debt backed by assets such as mortgages are raising concerns about the stability of FGIC, MBIA Inc., Ambac Financial Group Inc. and their competitors, as well as the safety of the $2.4 trillion of securities they guarantee. The companies are being reviewed by Moody's Investors Service and Fitch.
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