(Adds detail, S&P quotes)
NEW YORK Jan 18 Standard & Poor's on Friday
said it may cut its top "AAA" ratings for Ambac Financial
Group's insurance unit, Ambac Assurance Corp, citing the bond
insurer's decision to scrap a planned $1 billion equity issue.
"The decision not to proceed with the equity offering is
symptomatic of an environment in which Ambac's capital-raising
options are impaired," S&P said in a news release.
S&P also said it may cut its "AA" rating for parent company
Ambac Financial Group.
Ambac's planned equity issuance was meant to shore up its
balance sheet as securities linked to mortgages and other
consumer debt suffer from unexpectedly high losses.
A ratings cut would place Ambac at a competitive
disadvantage to other insurers, and could dramatically reduce
its new business.
"Ambac continues to explore capital-raising options, but it
is increasingly uncertain whether it can implement any of these
over the near term," S&P said.
The rating firm said it identified a capital shortfall of
approximately $400 million in new capital, based on the results
of a recent stress test.
"The amount of capital that Ambac may need to sustain our
view of the current ratings could continue to increase," the
rating firm said.
(Reporting by Neil Shah; Editing by Theodore d'Afflisio)