Moody’s Investor Service has downgraded Ambac Assurance Corp., Ambac Assurance U.K. , and Ambac Financial Group.
Ambac Assurance and Ambac Assurance U.K. have been downgraded to ‘Caa2’ from ‘Ba3’ with a developing ratings outlook. The action was prompted by Ambac’s recently announced large loss reserve increase, as well as credit impairment charge estimated for the second quarter.
Moody’s believes there will be increased pressure now in Amba’s counterparties to commute outstanding exposures on terms that could imply a distressed exchange.
Ambac Financial has been downgraded to ‘Ca’ from ‘Caa1’ with a negative outlook. Moody’s believes that the severity of loss on senior debt could be high, especially if the company’s performance further deteriorates.