Ambac shares recover; capital plan may help it keep Aaa rating

Feb.29, 2008 in Market Outlook

Ambac plan may help it keep Aaa rating: Moody’s

Bond insurer may still be downgraded; plan needs refining, agency says

By Alistair Barr, MarketWatch

Last Update: 1:42 PM ET Feb 29, 2008

SAN FRANCISCO (MarketWatch) — Moody’s Investors Service said Friday that Ambac
Financial may still lose its crucial Aaa rating, but the agency gave the
struggling bond insurer hope by suggesting a plan to raise new capital could be
enough to avoid a downgrade.

Ambac (ABK) remains on review for a possible downgrade because the bond insurer
doesn’t have enough capital to keep its Aaa rating, Moody’s said.

“Based on an updated assessment of Ambac’s mortgage risk, Moody’s believes that
Ambac’s capital exceeds the minimum Aaa standard but falls below the Aaa target
level,” the agency said in a statement.

That assessment was less upbeat than Moody’s statement earlier this week about
MBIA Inc. (MBI), a rival bond insurer that’s already raised more than $2 billion
in new capital. The agency affirmed MBIA’s Aaa rating, noting that the company’s
efforts to secure new capital were successful.

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