Ambac Financial Group, Inc, the bond insurer whose portfolio includes investments linked to the floundering mortgage market, will put off plans to raise equity capital to strengthen its finances as it faces losing its top level credit rating.

The firm cited market conditions as one of the reasons it opted not to pursue a previously announced an effort this week to raise $1 billion in capital.

The company also cited other factors, including recent actions of credit ratings agencies.

Ambac said raising equity capital is not an attractive option at this time as it continues to evaluate its alternatives. Ambac said it remains confident in its insured portfolio.

Two days ago, in addition to announcing its equity plan, Ambac cut its dividend by two-thirds, replaced its chief executive officer and wrote down $5.4 billion, including $3.5 billion related to subprime mortgage securities.

The next day, credit rating agency Moody's Investor Service warned that it was considering downgrading Ambac's AAA ratings if it didn't raise $1 billion in capital within six weeks.

Losing the rating would effectively take away the stellar credit rating Ambac needs to gain the trust of potential new clients.

The company's share price tumbled over the past year. Shares reached a peak of $96.08 in May but began dropping over the summer as the magnitude of the subprime crisis began to become apparent. In October, the company issued an earnings outlook below analysts' estimates, contributing to its decline.

It will hold a previously scheduled press conference call on Tuesday to discuss the matter further.