Ambac Financial (ABK) Shares Jump 24% After Announcing $1.4 Billion CDO Squared Transaction Settlement
More News related to ABK
- Ambac Financial (ABK) Postpones Launch of Everspan Financial; Douglas Renfield-Miller to Retire
- Ambac Postpones Its Efforts to Launch Everspan
- Ambac (ABK) Reports Q1 Loss of $1.36
- Ambac Financial Group, Inc. Announces First Quarter Net Loss of $392.2 Million
- Trading Radar for 5/11: McDermott (MDR), Fluor (FLR), Clear Channel Outdoor (CCO), Ambac (ABK), Energy Conversion Devices (ENER), DISH Network (DISH) Report
Ambac Financial Group, Inc. (NYSE: ABK) has settled one of its largest CDO exposures, AA Bespoke, in exchange for a final cash payment of $850 million to its sole counterparty. AA Bespoke is a $1.4 billion transaction that originally comprised AA rated CDO of ABS tranches, most of which have been downgraded to below investment grade since the inception of the transaction.
As of March 31, 2008, Ambac had recorded approximately $1.0 billion of mark-to-market losses, including an impairment loss of $789 million, against this transaction. As a result of the settlement, Ambac expects to record a positive pre-tax adjustment of approximately $150 million to its aggregate mark-to-market. In addition, the stress case losses in the rating agency capital models for this transaction exceeded Ambac’s final payment and therefore, the settlement will result in an improved excess capital position for Ambac Assurance Corporation.
Michael Callen, Chairman and CEO of Ambac, stated, “The primary benefit of this agreement is that it eliminates uncertainty with respect to future losses related to this transaction. We view the final outcome as favorable in light of the numerous widely circulated models that assumed a 100% write off for this transaction. This settlement also confirms our view that transaction mark-to-market adjustments are not indicative of ultimate credit impairment.” Mr. Callen continued, “This is an important milestone in our efforts to work with counterparties as we evaluate settlement as well as other restructuring opportunities related to our CDO exposures.”
Ambac Financial Group, Inc. is a holding company, whose subsidiaries provide financial guarantee products (including credit derivatives) and provides other financial services to clients in both the public and private sectors around the world.[SM]
Related Categories
Corporate NewsMomentum Movers
Stocks Mentioned
+24.22Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
