Wilbur Ross, the billionaire turnaround guy, might purchase Ambac (NYSE: ABK). Then again, he might not. Bloomberg writes “Ross stated this week he is ‘looking at’ bond insurers, which have tumbled after posting record losses on subprime mortgage securities.”
Shares in Ambac have fallen from a 52-week high of $96.10 to just above $11. But it is still not possible to know how bad things will get at the bond insurance company because its liabilities could change with the value of mortgage-backed securities.
If Ross is smart, and he’s, he will seek some kind of guarantee against huge losses. Regulators could provide this. It would be a superior alternative for them than to see a large muni bond insurer go under. That could cut the value of tens of billions of dollars in debt that’s now insured by Ambac and MBIA (NYSE: MBI).
If Ross can get a deal that caps his risk, he’s probably a buyer.
Douglas A. McIntyre is an editor at 247wallst.com.
Entries (RSS)