S&P: PMI Mortgage on watch

Standard & Poor's said it revised the counterparty credit and financial strength ratings on PMI Mortgage Insurance Co. to R (restricted) from CCC-.

The agency also said it placed on CreditWatch with negative implications the holding company PMI Group Inc.'s CC counterparty credit and issue-level ratings.

The company recently released a statement, indicating that it had been placed under supervision by the Arizona Department of Insurance.

PMI is no longer able to write new business and can no longer make interest payments on the outstanding $285 million of surplus notes issued to its holding company, S&P said.

The company also is prohibited from a variety of actions without the approval of the director of the department or its supervisor, the agency said.

The occurrence of a court-appointed receivership could at the bondholder's option result in about $735 million of the outstanding indebtedness becoming due or payable, S&P said.

The holding company would not have sufficient resources to meet its obligations in that event, the agency added.

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