Ambac Terminates Ratings Contract With Fitch

Following the lead of MBIA a few months ago, Ambac announced that it is terminating its rating contract with Fitch:

Our decision to refocus and realign our business around our core expertise in the public finance and infrastructure sectors has led us to re-evaluate our ratings needs. As part of this review, we have asked Fitch to remove its ratings on Ambac and all its subsidiaries effective immediately.


As I had said before, Fitch basically destroyed its business a few months ago by almost saying that it is incapable of pinning any concrete figures for the structured products (Jay Brown commented on this in his letter to Fitch a few months ago).
Ambac's decision was inevitable. The problem isn't that they downgraded Ambac; instead, the problem is that they give a huge advantage to pure muni-bond insurers and new entrants. Their models have always been questionable and were only a minor player in the industry. Unfortunately this prolongs the rating agency duopoly between Moody's and Standard & Poors but I'm not sure what else is possible right now. There is no point paying all these high fees to Fitch.

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