Saturday, February 23, 2008
If this rescue fails then their will be a big bang!
A rescue for bond insurer Ambac may be announced. 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. Investors fear that Ambac will lose its top credit ratings forcing investors to sell billions of dollars of securities and lifting borrowing costs for consumers and city governments. The U.S. bond insurance industry, which guarantees some $2.4 trillion of debt, is broadly looking to raise new capital and reorganize as expected losses have mounted. Rescuing or restructuring bond insurers is difficult.