Fitch Rating says it might cut the highly prized AAA ratings of some financial guarantors.

The cuts could result from a close look at the structured finance collateralized debt obligations the financial guarantors have insured, according to Fitch, Chicago.

The quality of the underlying collateral could play a big role in what happens to the risk ratings of the SF CDOs, and it’s possible that enough CDO ratings could “migrate” to hurt the ratings of some guarantors, Fitch says.

If a guarantor fell short of the Fitch capital requirements for a company with an AAA rating, Fitch would give the company a month to try to raise enough capital or reduce enough risk to allow the company to meet the AAA standards, Fitch says.

But Fitch “recognizes that recent capital markets volatility, including sharp declines in the share prices of the publicly traded financial guarantors, may make capital raising efforts difficult unless market conditions improve,” the rating agency says.

Meanwhile, in related news, Andrew Kligerman, an insurance analyst at UBS Investment Research, New York, has published a comment on a recent conference call with Douglas Lucas, head of UBS collateralized debt obligation research, and Tom Zimmerman, head of UBS asset-backed securities research.

The experts talked about recent problems with U.S. mortgage loans issued to consumers with poor credit ratings, and the securities backed by those “subprime” mortgages.

The “subprime market has ‘shut down,’ exacerbating subprime collateral loss outlook and pressuring [the] housing market,” Kligerman writes in his comment.

“Mr. Zimmerman thinks a Fed bailout is unlikely, and Fed agency programs will only help better-credit subprime borrowers,” Kligerman writes. “He doesn’t expect the housing market to stabilize until affordability improves via either (20%) home price drop or [2 percentage point] cut in mortgage rates (which he views as unlikely).”

But 2006 and 2007 mortgages seem to be faring much worse than older mortgage “vintages,” and U.S. life insurers tend to own securities backed by older, higher-rated mortgages, Kligerman writes.

Even for loans in the 2007 vintage, hits to AAA-rated CDO tranches should be minimal, Kligerman writes.