S&P ponders downgrade for PMI

Standard & Poor's may downgrade the ratings on five New Zealand and 202 Australian residential mortgage-backed securities over concerns for an Australian mortgage insurance firm which relies on a high degree of support from its US parent company.

S&P placed PMI Mortgage Insurance Australia on credit watch with negative implications last week after its parent announced a US$350 million ($465 million) loss for the third quarter of this year following problems in the sub-prime mortgage market.

The securities, which currently all have AA ratings, are made up of residential loans packaged into an investment product. Investors are usually large corporates.