- Can Apple Top Microsoft as Most Valuable Tech Firm?
- Buffett to Sell Stakes in Norfolk Southern, Union Pacific
- Do You Know Your Coca-Cola Myths?
- Electronic Arts Beats Street, Announces 1,500 Job Cuts
- Time Is Here to Look at Overseas Stocks: Bill Gross
- Home Prices Start to Stabilize In the US as Sales Pick Up
- Flaw in US Data Overstates Growth, Productivity
- Priceline Crushes Profit Forecasts; Shares Jump
- 'Modern Warfare 2' May Be Biggest Event This Year
- Warren Buffett to Sell Stakes In Union Pacific & Norfolk Southern
- Nov. 9: Unusual Volume Leaders
- The Battered Businesses Behind Housing
- Modern Warfare 2's Record-Breaking Launch
- Merck’s Mega-Monday Morning
- Why are Traders Bullish on This Food Company?
- Profiting From Natural Gas: Strategists
- S&P Stocks Trading at New 52-Week Highs
- Shopping for Answers
MOST SHARED
- Future of Marketing
- Home Prices Start to Stabilize In the US as Sales Pick Up
- Dow Up Over 100 After G20 Stimulus Pledge
- Oil Tomorrow
- Israel: Leader of Business Innovation
- Priceline Crushes Profit Forecasts; Shares Jump
- Dow Industrials at New Highs—But Other Indices Lag
- Rock Band Weezer Uses Snuggie to Promote New Album
- 'Modern Warfare 2': Biggest Entertainment Event of 2009?
Text Size 
News that the bailout of troubled bond insurer Ambac Financial Group has hit a snag is sparking a flurry of activity among bankers to get a deal done quicky, according to people involved in the talks.
As first reported by CNBC, the bailout effort ran into trouble on Wednesday when the bond rating agencies said they wanted to see more capital injected into the bond insurer. A consortium of banks had already agreed to come up with $2.5 billion in capital.
 |
Like other bond insurers, Ambac is in danger of losing its critical triple A debt rating unless it raises enough capital to offset billions of dollars in losses from risky subprime related debt.
Early Friday afternoon, Moody's said that Ambac will likely lose its triple A rating if a bailout plan isn't worked out. Standard & Poor's made similiar comments earlier in the week.
The banks are now trying to come up with a different type of structure for the bailout that will satisfy the rating agencies.
People close to the proposed bailout remain confident a deal will still happen, possibily by sometime next week. Banks and the rating agencies are aware that if Ambac collapses, it would trigger another wave of panic in debt markets and send the stock market reeling.
The structure proposed by the consortium of banks was essentially dividing Ambac [ABK
Loading...
()
] into a "good bank/bad bank" model by splitting up the municipal bonds book, considered more attractive, from the collateralized debt obligations (CDOs) book.
The consortium will now come up with another structure, which keeps the two together, which could mean that they would need even less capital to keep their triple-A rating, sources close to the deal said.
If the new structure is approved by the rating agencies, a deal could be put into place by early next week, and talks are likely to occur over the weekend, the sources said.
Print
Email
- Do free market libertarians really believe what they say about ethics and shareholder value? The Big Money takes a look.
- Cramer did the research and found eight stocks that lead the pack. Read on to get his top picks.
- On the anniversary of the fall of the Berlin Wall, many in the former Eastern Bloc recall communism fondly.
- Software, biotech firms, even banks are watching a particular Supreme Court argument today.
- From politicians to CEOs to companies, here's your chance to vote for the winners and losers of 2009.
- A new sinister Internet viruses can turn you into an unsuspecting collector of child pornography.
Data is a real-time snapshot *Data is delayed at least 15 minutes