Credit

A unit of Ambac Financial Group Inc. lost a crucial top AAA credit rating Friday, raising questions about the bond insurer's ability to win new business and possibly forcing some investors to sell billions of dollars of municipal bonds and other securities guaranteed by the company. Fitch Ratings cut Ambac Assurance Corp.'s top rating after the bond insurer, citing weak demand, scrapped plans to sell $1 billion of new equity. Ambac, the world's No.

Placentia officials vowed Friday to fight claims by Caltrans that the small north Orange County city owes the state more than $36 million. The money was spent for a controversial rail corridor project that devastated the town's finances. "Our understanding of the contract is that the state has no legal right to ask for money back unless there is an erroneous or mistaken payment," Mayor Scott Nelson said during a news conference at City Hall.

New York state insurance regulators confirmed Wednesday that they met with some major U.S. banks to discuss raising fresh capital for struggling bond insurance companies. Talks with the unnamed banks were part of New York State Insurance Superintendent Eric Dinallo's effort to stabilize the bond guarantors and bolster the industry's finances, agency spokesman Andrew Mais said.

As a credit crunch squeezed borrowers during the last three months of 2007, Los Angeles bucked the national downward slide in loans backed by the Small Business Administration. Driven by a higher number of smaller deals, loan volume here increased 3.5% to 1,319 from 1,275 in the year-earlier period, according to agency figures. But the amount lent fell $15.3 million, or 5.5%, to $265.2 million.

Orange County's latest investments in complex financial deals took a turn for the worse Wednesday when a fund in which the county placed $80 million neared default after a major U.K. bank aborted plans for a bailout. County officials said they expect the fund to miss a principal and interest payment to another investor today. That, in turn, would drive down the market value of Orange County's holdings.

Brazil, the world's largest emerging-market debtor for decades, became a net foreign creditor for the first time in January. International reserves, swelled by investment inflows and record exports of agricultural commodities and oil, probably exceeded gross foreign liabilities last month by about $4 billion, Banco Central do Brasil said Thursday.

The pump slowed and cut off Brendan Baker's purchase at $74. He returned the nozzle, swiped his credit card a second time, then put the nozzle back in his 2000 Dodge Ram 1500 and continued fueling. He finished pumping and looked at his two receipts, which totaled $95.23. "Normally I don't keep them because they remind me how much money I wasted," said Baker, a computer technician refueling at his local Sunoco station in Centreville, Va.

Focused on getting the nation's credit gears working smoothly again, the Federal Reserve is letting Wall Street firms draw emergency loans into next year and giving financial companies more options to help them overcome credit problems. The Fed's announcement Wednesday marked its latest effort to get credit flowing more freely. The global credit crisis has hobbled the U.S. economy, already reeling from a housing meltdown.

McDonald's Corp., the world's largest restaurant company, told some U.S. franchisees to seek other ways to finance store improvements after Bank of America Corp. declined to increase lending. Store owners have exhausted the financing available to install latte and espresso makers and make other upgrades, McDonald's said in a memo obtained by Bloomberg News. BofA won't provide more money, the memo said, because it's in the midst of acquiring Merrill Lynch & Co. and coping with the debt markets.

Chaos in the money markets gave Microsoft Corp. an opening Monday to announce that it would take on debt for the first time, launch a new $40-billion stock buyback plan and raise its dividend. The moves indicate that for all the credit problems plaguing the financial sector, cash-laden technology companies with good credit ratings are still borrowing money on favorable terms and otherwise enjoying flexibility. The largest information-technology company, Hewlett-Packard Co.