Ambac Falls From AAA Grace
Ambac Financial became the first bond insurer to lose its AAA rating after Fitch Ratings downgraded the company.
Fitch cut Ambac's Insurer financial strength rating to 'AA' from 'AAA' and its Long-term rating to 'A' from 'AA.'
Fitch, following its downgrade of Ambac Assurance, adjusted ratings accordingly for 137,990 municipal bonds and 114 non- municipal issues insured by the company and may reduce the companies rating further.
The industry guaranteed $100 billion of collateralized debt obligations linked to subprime mortgages, $22 billion of non-prime auto loans and $1.2 trillion of municipal debt.
The seven AAA rated bond insurers place their stamp on $2.4 trillion of debt. Losing those rankings may cost borrowers and investors as much as $200 billion.
Fitch cut Ambac's Insurer financial strength rating to 'AA' from 'AAA' and its Long-term rating to 'A' from 'AA.'
Fitch, following its downgrade of Ambac Assurance, adjusted ratings accordingly for 137,990 municipal bonds and 114 non- municipal issues insured by the company and may reduce the companies rating further.
The industry guaranteed $100 billion of collateralized debt obligations linked to subprime mortgages, $22 billion of non-prime auto loans and $1.2 trillion of municipal debt.
The seven AAA rated bond insurers place their stamp on $2.4 trillion of debt. Losing those rankings may cost borrowers and investors as much as $200 billion.
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