Moody's said that its ratings outlook for the financial guarantors' industry is stable for the next 12-to-18 months, but "a number of factors continue to create a challenging operating environment for the industry as a whole."

At the same time, Moody's said in its report--"Global Financial Guaranty Insurance Industry Outlook"--that looking beyond the current "challenging operating environment," emerging structural trends affecting the world's financial markets "are likely to provide substantial opportunities for the guarantors over the medium to long term." Financial guarantors underwrite municipal bonds and other credit facilities.

James Eck, vice president and senior analyst, said in a statement, "These opportunities are expected to arise from increased financial disintermediation globally," as well as growing institutional demand for low-risk securities and the pending implementation of Basel II. Basel II is an international agreement on capital adequacy among banking supervisors.