Test #3: Fitch Places Ambac on Ratings Watch Negative

Fitch, the last remaining rating agency without an opinion, released their updated rating review. It doesn't look like they are releasing any free excerpts so I'm not sure about the details. All I can go by is what the news sites say:

The AAA rating of Ambac's bond insurance unit was put of Rating Watch Negative by Fitch, which means the agency will downgrade to AA+ in four to six weeks unless the company can boost is excess capital levels before then.

A review by Fitch of Ambac's exposure to CDOs and residential mortgage-backed securities found that the insurer is roughly $1 billion short of the extra capital it needs to keep its AAA rating, the agency explained.


Can't say much without looking at the actual report but it seems like Ambac needs to raise $1 billion. We just need to wait and how Ambac actually raises money.

One piece of new information (at least to me) was the following:

The review included an assessment of a $3 billion commitment by Ambac to fund a pool of other structured finance CDOs as of Sept. 30, Fitch noted.


I'm not sure what that is referring to. If anyone can shed some light, feel free to leave a comment...

Comments

  1. MarilynDecember 23, 2007 at 9:55 AM

    Keep up the good work. Merry Christmas!

    ReplyDelete
  2. Sivaram VDecember 23, 2007 at 10:54 AM

    People actually read my blog? ;)

    Thanks for the warm wishes... All the best to you & your family as well... may 2008 be a prosperous one for you...

    ReplyDelete
  3. AnonymousDecember 23, 2007 at 3:29 PM

    I don't know what will happen in the future. Since I am also making a concentrated bet on ABK, I feel that my opinions are biased. Here is my rationale;

    I feel that bankrupcy is a remote possibility. As an investor still building up to my retirement. I don't play remote possibilities. There is always a possibility that the world will come to an end but we don't base our investments that way.

    The next worst scenario is a major capital dilution. I feel that at this time, the market has factored a significant portion of this into the stock. In a very bad situation, I will get significant part of my money back eventually.

    For what it is worth, Marty Whitman was on reccord very recently as saying that they are now going big time into MBI, ABK and radian. You can find the link in the message board of MBI.

    Happy holidays and a prosperous 2008 to you.

    John

    ReplyDelete
  4. AnonymousDecember 24, 2007 at 12:00 AM

    Here is the link

    http://www.cnbc.com/id/15840232?video=613034036&play=1

    John

    ReplyDelete
  5. Sivaram VDecember 24, 2007 at 3:37 PM

    thanks for the link Neanderthal... that's a nice find...

    ReplyDelete

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