by Calculated Risk on 1/16/2008 05:42:00 PM

From Bloomberg: S&P Will Review Bond Insurers With New Assumptions

Standard & Poor's will re-examine the AAA credit ratings of bond insurers including MBIA Inc. and Ambac Financial Group Inc. after deciding that the housing slump will cause bigger losses from subprime mortgages than anticipated.

S&P, which completed a review of the bond insurers in December, will rerun a stress test ... The test will be completed within a week ... The ratings company is now assuming losses on 2006 subprime mortgages will reach 19 percent, up from 14 percent ... That may make S&P more likely to downgrade mortgage-backed securities guaranteed by the bond insurers.

I'm not sure if the current review will also include downgrades to the CDOs based on the new assumptions; if it doesn't, then the insurers will probably be reviewed again in a couple of months.