Friday, February 29, 2008 2 comments ++[ CLICK TO COMMENT ]++

Ambac Lowers Dividend and Goes Easy on Structured Products

Bond insurers have somehow managed to transform a breathtakingly dull corner of the financio-sphere into an action-packed, thrill-a-minute spectacle filled with dire peril, a torrent of rating-agency press releases, and eager entreaties from big-name billionaires.


BusinessWeek captures what I have said previously. I hope those sitting on the sidelines are enjoying the show. A day doesn't go by without some potentially market-moving news emerging from one of the monolines. After the market closed, Ambac indicated that it is lowering the quarterly dividend to $0.01. It also indicated that it will not write structured finance insurance for 6 months. Supposedly this frees up $600 million. They are also discontinuing some areas that aren't expected to perform well.


2 Response to Ambac Lowers Dividend and Goes Easy on Structured Products

March 2, 2008 at 12:26 PM

I also read that Ambac was looking at a m-t-m write down of 670 million just for January and things were looking no better for Feb., which indicates the credit markets are still in serious lockdown/collapse.

Oh, I came across this brand new blog from a ex Ambac employee. Hopefully, he will keep on posting.


March 2, 2008 at 2:13 PM

MBIA indicated that they will take sizeable mark-to-market losses so the rest of the industry will as well. The ABX index (admittedly a crude proxy) has been weakening. I mean, even AIG reported a massive mark-to-market loss (although it isn't that big for a company of that size). However, I am expecting smaller marks than last quarter. Last quarter was something like $3 billion mark-to-market loss, and I'm expecting (hoping?) for less than $1b to $1.5 billion now.

The real question, as always, is if Ambac will book real losses or increase its loss reserves. The shocking thing last quarter was the $1 billion impairment. If there is anything similar to that number again, it's going to be close to game over for existing shareholders.

Not surprisingly, new business is close to zero as well...

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