If these guys sink, then say hello to the deep freeze. Fixed income will be shut for years...

Jan. 29 (Bloomberg) -- New York Insurance Superintendent Eric Dinallo's attempt to bail out bond insurers is ``coming too late in the game'' to stave off ratings downgrades, CreditSights Inc. analysts said in a report.

Bond insurers including MBIA Inc. and Ambac Financial Group Inc., the two largest, have guaranteed about $2.4 trillion of securities issued by U.S. cities and states and bonds backed by mortgages, credit cards and other assets. The industry has been seeking capital since November when Fitch Ratings and Moody's Investors Service began reviewing the effect of rising defaults on subprime mortgage securities guaranteed by the insurers.

Dinallo's department hired investment bank Perella Weinberg Partners to advise it on the financial stability of bond insurers and how to protect their customers, the Wall Street Journal reported today, citing people familiar with the matter.

Fitch Ratings cut the AAA ranking on the financial guarantee units of Ambac in New York and Bermuda-based Security Capital Assurance Ltd. earlier this month. The ratings company is due to rule on whether Financial Guaranty Insurance Co., the fourth- largest bond insurer, has raised enough capital to preserve its AAA rating.

FGIC in Stamford, Connecticut may have its ratings cut by as many as four levels to A+, according to Michael Cox, an analyst at Royal Bank of Scotland Group Plc, wrote in a report published today. The insurer's rankings may be reduced today, he wrote.

The bond insurers, which began by guaranteeing the notes sold by U.S. municipalities to fund roads and schools, stumbled as they expanded into structured finance such as collateralized debt obligations. CDOs repackage pools of bonds, loans and credit-default swaps and slice them into separate pieces of varying risk and return.

Lower ratings for the insurers may cause a new round of writedowns on debt holdings at the world's financial companies, potentially forcing banks to raise another $143 billion to bolster capital, analysts at Barclays Capital said last week.