Giant bond insurer Ambac eyes a sale
Ambac (ABK) is looking to sell itself or tap an outside investor. The big bond insurer, which last week suffered a ratings downgrade and was forced to pull a planned $1 billion capital-raising plan, said it “is evaluating strategic alternatives with a number of potential parties.” Ambac didn’t offer further information, but reiterated that it believes the market is overreacting to the company’s perceived financial straits.
Of course, the market’s response doesn’t seem totally out of line, given that just this morning the company posted a loss of $3.3 billion, or $31.85 a share, for the fourth quarter, reflecting more than $5 billion in mark-to-market losses on its credit derivatives portfolio. Ambac has said it believes the market prices don’t reflect the economic performance of those positions.
Still, new chief Michael Callen said, “The disappointing bottom line for the fourth quarter and the year, resulting from the unprecedented turmoil in the financial markets, is a set back for Ambac. The poor credit market conditions have severely impacted asset values. Ambac is committed to ensuring that its valuations appropriately reflect current market conditions.” Sounds like more markdowns could be on the way.
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