Posted on 11/19/2008 10:40:26 PM PST by TigerLikesRooster
S&P downgrades Ambac again
Shares slump, but rebound in late trading on CDO commutation
By Alistair Barr, MarketWatch
Last update: 7:01 p.m. EST Nov. 19, 2008
SAN FRANCISCO (MarketWatch) -- Standard & Poor's said Wednesday that it downgraded Ambac Financial and the company's main bond insurance unit because the rating agency expects more losses from guarantees of mortgage-backed securities and collateralized debt obligations.
S&P downgraded the senior debt of Ambac Financial (ABK AMBAC Inc) to BBB from A. It also cut Ambac Assurance Corp., the bond insurance subsidiary, to A from AA. The outlook is negative.
"The company's exposures in the U.S. residential mortgage sector and particularly the related collateralized debt obligation structures have been a source of significant and comparatively greater-than-competitor losses and will continue to expose the company to the potential for further adverse loss development," S&P credit analyst Dick Smith said.
"These losses have slightly more than offset the benefits to the company of lower capital requirements that result from a declining book of business," he added.
S&P also warned that the holding company, Ambac Financial, may face added liquidity stress next year. That's because its main bond insurance unit can't pay dividends to the holding company unless its regulator, the Wisconsin Insurance Commissioner, approves.
(Excerpt) Read more at marketwatch.com ...
Ping!
Looks like we are going to continue our race to the bottom again tomorrow. Tokyo is down almost 7%.
Much like they say in the 4 AM infomercials....
“How could I use that information to work for me.”
Answer: Wait till muni bonds pay 8% again. Than you can get rich while State Gubmints get poor paying you tax free income.
The other thing that folks need to keep on their radar scope is the coming melt-down in the commercial real-estate market. The Commercial Mortgage Backed Securities (CMBS) arena is getting more toxic by the day. We're beginning to see some major commercial real-estate deals go south.
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