Sources say Ambac Financial Group (ABK) is drawing nearer to sealing a $3B capital injection that will allow it to restructure, and save its critical AAA rating. The plan involves a $2.5B stock issue to existing shareholders at a discount, backed by bankers including Citigroup (C), UBS AG (UBS), Wachovia (WB) and Royal Bank of Scotland (RBS), who would commit to buying any shares unsold. Ambac will also sell $500M of debt. Banks are exposed to companies like Ambac and MBIA (MBI) who insure some of their riskier portfolio assets, such as CDOs. A sharp downgrade to the insurers could trigger a fire-sale of such assets.
Markets soared into positive territory during Friday's final minutes when news of the potential rescue broke.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment