Bond insurer Ambac Financial -- whose guarantee is behind billions of dollars in asset-backed bonds collateralized by subprime loans -- saw its stock plunge 60% in trading early Thursday after Moody's Investor Service said it is reviewing the company for a possible downgrade. The news comes on the heels of Ambac's recent announcement that it has an estimated $5.5 billion pretax loss on credit derivatives for the fourth quarter. In trading, Ambac's shares were down 62% to just $5 a share. In a statement regarding the possible downgrade, Ambac called it a "surprising" move on Moody's part, adding that "Management remains confident in Ambac's insured portfolio and will communicate further on these matters."

Subscribe Now

Authoritative analysis and perspective for every segment of the mortgage industry

30-Day Free Trial

Authoritative analysis and perspective for every segment of the mortgage industry