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Citing deepening problems in the mortgage market, Standard & Poor's cut the rating of one troubled bond insurer on Wednesday and assigned a negative outlook to four other companies that guarantee debts linked to home loans.

The announcement shook an already unsettled credit market, signaling that investment banks and others that had thought they were protected from rising foreclosures might not be immune from all losses. Investors bid up Treasury debt, a refuge in troubled markets, and sold shares in bond guarantors and some investment banks.

In another indication that credit markets remained unhinged, the Federal Reserve said that its auction of $20 billion in short-term loans to the banking system drew 93 bids, seeking more than three times the amount available. Banks have become increasingly reluctant to lend to each other in the last few weeks, prompting the Fed to use new methods to lend directly to the banks.

The biggest impact of the S.& P. announcement was felt by investors who had bought protection from the ACA Financial Guaranty Corporation, whose rating was cut to CCC, a subinvestment grade, from an A rating. Merrill Lynch, the Canadian Imperial Bank of Commerce and several other investment banks could be forced to acknowledge billions of dollars in losses on securities that they insured through ACA.

S.& P. affirmed AAA ratings for MBIA, Ambac, XL Capital and Financial Guaranty Insurance, but assigned a negative outlook to them. And it left unchanged the ratings of five other bond insurers.

Later in the day, ACA said it had reached an agreement with its clients that would put off until Jan. 18 a requirement that the company post about $1.7 billion in collateral to cover future losses if its rating fell below A.

It said it would use the next month to come up with a more lasting solution to its financial problems, which could include raising new capital. It could also renegotiate the terms of its insurance contracts for a longer period.

The temporary agreement is a result of negotiations involving several banks that bought insurance from ACA, like Merrill and C.I.B.C. The talks have also involved Bear Stearns, whose merchant banking affiliate owns 29 percent of ACA.

It is unclear how much money ACA would have to raise and where it might turn for such an infusion. An S.& P. analysis indicated that ACA's portfolio of insurance contracts, also known as credit default swaps, could show losses of $2.2 billion above the $650 million it is capable of handling.

ACA has insured about $26 billion in mortgage-related collateralized debt obligations, some of them considered at high risk of loss as more homeowners fall behind on payments and end up in foreclosure. ACA typically makes up interest and principal payments to investors like Merrill Lynch if losses in C.D.O.'s they hold rise above certain thresholds set in the terms of their contracts. (ACA said Wednesday that the AAA-rated C.D.O.'s it had insured continue to carry the top rating.)

A spokeswoman for Merrill declined to discuss its exposure to ACA, but some analysts have said that it may have to write down as much as $3 billion if ACA fails. Shares in Merrill declined 78 cents on Wednesday, to $54.73.

C.I.B.C. has been the only bank to publicly acknowledge its exposure. In a statement released before the temporary arrangement was announced, the Canadian bank said there was a "reasonably high probability" that it would have to write down mortgage securities it had insured with ACA, suggesting that the charge could total up to $2 billion. C.I.B.C. fell $1.83 in New York, to $70.60, its lowest close in more than a year.

Shares of ACA Capital Holdings, the insurer's parent company, which has been delisted by the New York Stock Exchange, were trading at 65 cents on over-the-counter markets; they had been as high as $1 early Wednesday after The New York Times reported that investment banks were discussing aid for the company.

The S.& P. move left credit market investors with little comfort about the safety of mortgage securities, particularly those linked to home loans made to people with blemished, or subprime, credit. Many investors are counting on bond insurance to protect them from losses, and others have used credit protection contracts to bet that the housing market will weaken further.

Ratings firms like S.& P., Moody's Investors Service and Fitch Ratings find themselves in a tough position, with some investors demanding quick action while the guarantors are asking for more patience. Downgrades would make it impossible for insurers like MBIA and Financial Guaranty to write new contracts, which would undermine their already tenuous financial position.

Derrick Wulf, a portfolio manager at Dwight Asset Management in Burlington, Vt., said investors were trying to price bonds assuming that the insurance on them was worthless. "Given the fact that so much depends on what the ratings agencies ultimately decide, which can be very difficult for investors to forecast," he said, "there isn't a heck of a lot of trading."

In a conference call, officials at Standard & Poor's said that unlike ACA, most bond guarantors do not face an imminent crisis, because they pay claims only when bonds are in default and monthly payments have stopped, and even then in small monthly increments.

Still, the firm's analysis showed that some guarantors like MBIA and Financial Guaranty face losses far larger than the capital they have on their books.

In a related move, S.& P. also downgraded hundreds of municipal and corporate bonds that had been insured by ACA, because they no longer carried the protection of an A-rated insurer. As of September, ACA insured $7 billion in municipal and $43 billion in corporate debt.