Ambac rescue may be announced Mon or Tues--source Friday February 22, 11:52 pm ET By Dan Wilchins
NEW YORK (Reuters) - A rescue for bond insurer Ambac Financial Group Inc (NYSE:ABK - News) may be announced on Monday or Tuesday, a person familiar with the matter said on Friday.
Ambac, facing billions of dollars of expected losses from guaranteeing repackaged subprime mortgages, is talking to banks and regulators about raising extra capital to keep its top credit ratings.
A deal has not yet been signed, and may still fall through, but talks with banks including Citigroup Inc (NYSE:C - News), UBS AG (VTX:UBSN.VX - News) and Wachovia Corp (NYSE:WB - News) are advancing, although there are still details to be worked out, the person said.
Investors fear that Ambac will lose its top credit ratings from Moody's and Standard & Poor's, forcing investors to sell billions of dollars of securities and lifting borrowing costs for consumers and city governments. U.S. stocks, which had been in negative territory for most of the session, turned positive after the prospect of an Ambac rescue was initially reported by CNBC television.
Ambac shares rose 16 percent to close at $10.71 on the New York Stock Exchange, but the second-largest U.S. bond insurer's shares have fallen 88 percent since the start of 2007
MFG Chalifmann |