Ambac also said it would cut its common dividend and stop insuring risky debt for six months.
Both Moody's and Standard & Poor's said they would affirm Ambac's triple-A ratings if the capital-raising is successful. Fitch Ratings, however, said it would maintain its recently lowered double A rating.
Still, even if Ambac raises the money, it will remain on negative credit watch, meaning it could still lose its triple A rating if business conditions don't improve.
Ambac shares , which were halted around midday, fell sharply when trading resumed around 1:20 pm ET. Investors had hoped for a larger contribution from global banks to help Ambac, whose plan will dilute its outstanding shares.
Like other bond insurers, Ambac got into trouble by moving beyond guaranteeing safe municipal bonds and insuring risky subprime-related debt. The resulting loses have threatened Ambac's triple A rating, which it needs to attract new clients.
Ambac's current clients, including many of the banks involved in helping Ambac raise capital, were worried that a downgrade of Ambac would force them to write down more of their own subprime-related debt. Citigroup and Barclays are among the banks helping Ambac that held these risky bonds, known as collateralized debt obligations, or CDOs, enhanced by Ambac's Triple A rating.
Private equity firms with no ties to Ambac were also expected to participate in the recapitalization but are not under the current plan. One private equity firm, Cerberus, is still on the fence, adding to the fears that the offering isnt big enough.