The rating for Ambac Assurance, the bond-insurance unit of Ambac Financial Group, was cut to junk status by Moody's Investors Service on Monday. Moody's downgraded Ambac Assurance to Ba3, five steps below its previous rating and three steps lower than investment grade. "The downgrade of Ambac's ratings primarily reflects weakened risk adjusted capitalization, as Moody's loss estimates on residential mortgage-backed securities have increased significantly," Moody's said.

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