Ambac Financial Group Inc. tumbled 19% in New York Stock Exchange trading after the bond insurer’s plan to raise $1.5 billion failed to allay concern that it may lose its AAA credit rating.

Investors had anticipated banks would be part of a bailout that would raise as much as $3 billion, enough to overcome record losses on subprime-mortgage debt. Instead, the New York-based company will seek buyers for $1 billion of common shares and $500 million of equity units, according to a statement yesterday.

“This wasn’t what the market was hoping for,” an analyst at CreditSights Inc., a bond research firm in New York, Robert Haines, said. “There’s no bailout. It’s just a capital raise, and there’s no guarantee they’ll get it done.”

Ambac shares dropped and credit-default swaps rose, indicating worsening perceptions of credit quality, even though Standard & Poor’s and Moody’s Investors Service said today they would probably confirm the company’s AAA rating after the offering. With such a limited capital raising, Ambac may not be able to keep its AAA rating for long, an analyst with hedge fund Sanno Point Capital Management in New York, Peter Plaut, said.

“Ambac’s capital raising might save the company’s AAA ratings in the short term, but the outlook for continued writedowns and impairments to capital clearly indicates that this is not a AAA industry,” Mr. Plaut said.

Ambac, larger competitor MBIA Inc., and the rest of the industry stumbled after expanding beyond municipal insurance to guarantees on collateralized debt obligations that have since tumbled in value. Bond insurers with AAA ratings have guaranteed $2.4 trillion of debt.

The loss of Ambac’s top rating would cast doubt on $556 billion of municipal and asset-backed securities insured by the company, forcing some investors to sell the debt and others to reduce their holdings.