Standard & Poor's
supports other analysts who believe private mortgage insurer PMI Mortgage Insurance (PMI)
is safe for now, given its ability to maintain solvency through at least the second quarter of next year.
The New York-based ratings agency removed all of PMI's ratings from "credit ratings watch" even though its overall outlook for PMI remains negative on the grounds the firm could struggle to maintain adequate capital over the long haul.
S&P's somewhat improved short-term outlook for PMI is in-line with other analysts who defended the mortgage insurance firms this week, saying liquidity issues will be an ongoing battle even though a bankruptcy or insolvency issue is unlikely in the near future.
PMI's improved outlook through next year resulted from S&P's belief that the insurer could shore up more capital using both internal and external capital initiatives.
"PMI will be able to meet the fourth-quarter 2011 $50 million outstanding (payment) on its credit facility," S&P said. "The next maturity of $250 million does not come due until 2016. Like with PMI, we continue to carefully monitor results across the sector on a quarterly basis. We will take rating actions when there are significant adverse deviations from our forecasts."
Every private mortgage insurer faces extreme liquidity pressure, according to CreditSights
analyst Rob Haines, but the possibility of bankruptcy in the immediate future is unlikely for industry players.
Concerns about "near-term insolvency and bankruptcy are overinflated," Haines told HousingWire
this week. "But concerns over the fact these companies are taking on too much risk is not an overblown concern."
Write to Kerri Panchuk.