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As the credit crunch strains the bond insurers, Ambac Financial Group Inc. received a strong vote of approval from Moody's Investors Services, which late last week affirmed its AAA credit rating for Ambac. On Friday afternoon, Moody's said the bond insurer's excess capital positions would remain at AAA levels under stressed credit scenarios. Bond insurers usually need a AAA rating to continue operations.
All three rating agencies, Moody's, Standard & Poor's and Fitch Ratings, are not only reviewing Ambac's financial positions but all bond insurers in the wake of rising defaults in the mortgage market. Those rising defaults have put a strain on bonds and debt backed by the troubled loans, leading to worries the bonds themselves would default and companies such as Ambac would be required to pay out billions of dollars in claims. Last week, Ambac's peer MBIA Inc., the largest bond insurer, shored up its financial position by taking a $1 billion investment from Warburg Pincus. Despite the credit rating affirmation, Ambac will continue to review its options to shore up its financial positions, perhaps suggesting a deal similar to the MBIA capital infusion is not out of the picture. — Matthew Wurtzel See press release via BusinessWire Categories Deal Video
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