Fitch lowers ratings on 137,000 Ambac-insured municipals

By Laura Lutz

Des Moines, Jan. 22 - Fitch Ratings said it downgraded about 137,000 municipal bonds that are insured by affiliates of Ambac Financial Group Inc., according to a news release.

Fitch downgraded Ambac's insurer financial strength rating to AA from AAA on Friday, and the insurer remains on negative watch.

Ambac-insured bonds with underlying ratings equal to or higher than the insurer rating will be rated based on the level of the underlying rating.

Under that policy, 261 bonds with underlying ratings of AAA remained at AAA, 757 bonds with underlying ratings of AA+ were downgraded to AA+ and 4,234 bonds with underlying ratings of AA were downgraded to AA.

About 132,000 Ambac-insured bonds were downgraded to AA because they either have underlying ratings lower than AA or do not carry underlying ratings from Fitch. Those bonds are on negative watch.

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