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Fitch downgrades Ambac
Fitch Ratings said it downgraded Ambac Financial Group, Inc.'s long-term rating to A from AA; its $400 million 5.95% senior unsecured notes due 2035, $142.5 million 9 3/8% senior unsecured debentures due 2011 and $75 million 7½% senior unsecured debentures due 2023 to A from AA; and its $400 million subordinated notes due 2087 to A- from AA-.
The ratings remain on Rating Watch negative.
The downgrade follows Ambac's announced decision to suspend efforts to raise capital at this time. When Fitch first placed Ambac on Rating Watch on Dec. 21, the company a modeled capital shortfall of $1 billion at the AAA rating threshold. The agency said the downgrade places Ambac's rating at a level consistent with its currently modeled capital adequacy threshold without the benefit of the noted capital increase.
The downgrade and the negative Rating Watch also reflect the significant uncertainty with respect to the company's franchise, business model and strategic direction; uncertain capital markets and the impact of Ambac's recent decisions on future financial flexibility; the company's future capital strategy; ultimate loss levels in its insured portfolio; and the challenges in the financial guaranty market overall, Fitch said.
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