Ambac considering option to split itself: report
Bond insurer Ambac Financial Group Inc is in discussions to split itself up in a move aimed at ensuring that municipal bonds backed by the company retain high credit ratings, the Wall Street Journal said on its website on Monday.
A deal could fall apart because of the complexities in such a move, said the report, quoting a source familiar with the situation.
A halving of Ambac would create one unit to insure municipal debt and one that would cover rapidly diminishing securities tied to mortgages in a structure that effectively would create a so-called "good bank" and "bad bank", the report said.
A spokesman for Ambac was not immediately available to comment.
Last week, FGIC Corp, a bond insurer that has lost its top credit ratings, told New York regulators it wants to split into two companies.
US bond insurers, which guarantee more than $2.4 trillion of debt, have been hit hard by the sub-prime lending crisis and are struggling to keep the top ratings that are crucial for them to win new business. (Reuters)
Follow Emirates 24|7 on Google News.