Shares in Dexia crashed on Tuesday after ratings agency Moody??s said it could strip the Belgian-French financial services group??s U.S. bond insurance subsidiary FSA of its triple A status.
Dexia shares fell by as much as 15.6 per cent to ?8.06. Moody??s Investors Service said late on Monday it had placed the insurance financial strength ratings of Financial Security Assurance (FSA) under review for possible downgrade based on ?elevated risks? of the market and of FSA??s insured portfolio.
FSA said in a brief reaction that it noted the concerns and would work closely with the agency to re-establish its top rating.
Dexia has repeatedly stressed that FSA avoided risky collateralised debt obligations (CDOs) backed by assets such as subprime mortgages, unlike its major rivals.
FSA is one of only two U.S. bond insurers to retain a triple-A credit rating. Rivals MBIA Inc and Ambac Financial Group have been downgraded due to losses expected from insuring risky residential mortgage-backed debt.
