Moody's downgrades Ambac

Moody's Investors Service said it downgraded Ambac Financial Group, Inc.'s senior unsecured debt to Ba1 from A3.

The action concludes a review for downgrade that began on Sept. 18 and reflects Moody's view of Ambac's diminished business and financial profile resulting from its exposure to losses from U.S. mortgage risks and disruption in the financial guaranty business more broadly.

The outlook is developing.

Moody's said the downgrade results from expectation of greater losses on mortgage related exposure, possibility of greater-than-expected losses in extreme stress scenarios, diminished business prospects and impaired financial flexibility.

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