ABK: Ambac (ABK) Considering Bankruptcy (I'm sure u saw this, just amazing tho...the end of the road for municipal insurance companies....)
Jun 8, 2010
Ambac Financial Group (ABK) may default on its loan obligations – possible bankruptcy filing
Ambac has been dead for a long time, it seems they are just now smelling the rotting corpse that they are. Way back on June 30, 2008 I wrote that either Ambac or MBIA would end up insolvent, or worse yet they would end up being another taxpayer funded bailout. (original article here)
Well it seems that Ambac has started to move funds around in what can only be viewed as a precursor to bankruptcy. Late today Ambac announced that they commuted their remaining $16.4 Billion of exposure to CDO’s at its operating company.
When companies begin moving funds from operating divisions to the holding company, or vice-versa, it usually means a bankruptcy or default is not far off.
The FT reports:
NEW YORK, June 8 – Ambac, the bond insurer whose toxic assets were seized by Wisconsin state regulators in March, said it could default on its loan obligations and was still considering filing a prepackaged bankruptcy.
The company, which has had trouble writing new business since losing its triple-A credit rating in 2008, said in a US Securities and Exchange Commission filing on Tuesday that “as early as the second quarter of 2010” it may decide not to make interest payments on its debt, which could result in a default. {…} (FT)
Bondholders are hoping that a bankruptcy and reorganization will allow them to swap their debt holdings in exchange for a majority stock ownership of the reorganized company. If such a deal does transpire it will likely wipe out the common shares.
It remains my view that Ambac’s future, even with a prepackaged bankruptcy is bleak.
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If you take anything I say as advice, you're crazier than I am.
