Will Wilbur Ross buy Ambac (ABK)?

Posted Jan 25th 2008 6:55AM by Douglas McIntyre
Filed under: Deals, Rumors

Wilbur Ross, the billionaire turnaround guy, might buy Ambac (NYSE: ABK). Then again, he might not. Bloomberg writes "Ross said 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 is, he will seek some kind of guarantee against huge losses. Regulators could provide this. It would be a better alternative for them than to see a huge muni bond insurer go under. That could cut the value of tens of billions of dollars in debt that is now insured by Ambac and MBIA (NYSE: MBI).

If Ross can get a deal that caps his risk, he is probably a buyer.

Douglas A. McIntyre is an editor at 247wallst.com.

Tags: ABK, Ambac, inthenews, MBI, MBIA, MNIA