The counterparty credit rating of Ambac Assurance Corp, the chief operating unit of Ambac Financial Group (ABK) has been upgraded by Standard and Poor’s to “CC” from “selective default”, with a developing outlook.
 
Though the current rating stands ten levels below the investment grade, the rating agency has eased its outlook about the company citing improved financial position; all the same, regulatory intervention remains high. However, being so far below investment grade, the upgrade would not help the company to gain business. Ambac has seen its ratings improve almost after one and a half year.
 
The rating agency also affirmed its “CC” financial strength rating on Ambac and removed the rating from CreditWatch.
 
Ambac has suffered multiple rating downgrades from June 2008 through August 2009. The downgrades have adversely impacted the company’s ability to generate new business and hurt its operating and financial results.
 
Extremely high exposure to troubled assets, coupled with losses from collateralized debt obligations, residential and other types of structured products have crippled Ambac. Venturing into the structured finance market has triggered massive mark-to-market losses.
 
In its quarterly filing last month, management disclosed that it is facing a liquidity crunch and is developing strategies to address its liquidity needs. However, if it fails in its efforts, it will consider seeking bankruptcy protection.
Read the full analyst report on “ABK”
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