The fundamentals for our earlier released ideas on Ambac Sr. Debt are improving. Meanwhile, prices have not changed much.
Recent publications have been positive. First, there was JP Morgan denying putback demands from securitizations while seeking to putback the same mortgages to originators. Now, more light on Bear Stearns’ collecting money and benefits from non-qualifying collateral and not passing it on to the affected securitization trusts.
Less importantly for Sr. Debt, the suit brought by the IRS against Ambac will likely make this bankruptcy an even longer one. Notably, Ambac has filed a request for extension on the deadline to submit a key plan on how it will treat creditors. These delays give more time for recovery lawsuits to develop. This essentially extends the duration of the call on assets provided by the subordinated DISCS, which have been trading between 0-3% of par recently. While we still expect these to be wiped out, it may be worth throwing some on top of a sr. unsecured position, just in case.
I mean, seriously, who wants to be stuck with a 500% return when 3000% is possible?
UPDATE II - The previous update regarding Ambac Assurance preferred securities should be ignored as your lazy no good analyst failed to confirm the information until after posting the update. While these 144a securities do exist and make sense at the proposed price, no pricing or availability can be sourced by The Blue Dragon at this time.
UPDATE II - The previous update regarding Ambac Assurance preferred securities should be ignored as your lazy no good analyst failed to confirm the information until after posting the update. While these 144a securities do exist and make sense at the proposed price, no pricing or availability can be sourced by The Blue Dragon at this time.
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