Ambac Assists Clients in Lowering Their Interest Costs on Variable Rate Debt
22 Avril 2008 - 6:58PM
Business Wire
Ambac Financial Group, Inc. (NYSE: ABK) (Ambac) today announced
that they have successfully worked with their clients to help lower
their borrowing costs on auction and variable rate debt in over a
100 transactions. Ambac�s objective is twofold: to provide clients
with immediate interest rate relief, and to allow them to retain
the long-term benefits of the bond insurance they purchased. Since
January, more than $700 million in conversions to Ambac-wrapped
fixed-rate deals have been approved including transactions for the
University of Cincinnati, Kentucky Utilities Company, Southern
Indiana Gas and Electric Company, Cascade Healthcare, Catholic
Healthcare West, Renown Health (formerly Washoe Medical Center) and
El Camino Hospital. These issuers will save millions of dollars in
interest costs per annum as a result of exiting the short-term
variable rate markets. In addition, Ambac has been active in
exploring, developing and implementing various amendments, consents
and waivers to provide clients temporary or permanent relief from
the wide credit spreads. We have approved changes to 75 term
conversions that allow the issuers to tap into different investor
bases or to temporarily buy their own securities. Transactions
totaling over $4 billion have benefited from these conversions,
including deals for Palm Beach County School Board, Miami-Dade
County School Board, Alaska IDA, Pasadena, City of Babylon, Pacific
Gas & Electric Company, St. Anthony's Medical Center, St.
Louis, MO, and Virginia Tech Foundation. In the Variable Rate
Demand Obligations (VRDO) market, Ambac has worked with various
banks to amend the liquidity agreements in order to reduce the risk
of cancellation of these agreements. These changes provide further
assurance to investors that liquidity in their securities will be
maintained. We have closed eight such amendments for over $1
billion in securities. As a result, the borrowing costs of
Ambac-wrapped VRDOs have decreased by 100-200 basis points.
Examples of deals where this has been completed include Utah Water,
Intermountain Power Agency and The Medical Center of Central
Georgia. Ambac has also been a leader in working with banks
providing direct pay letters of credit as additional security and
liquidity for Ambac-insured obligations. These credit facilities
are designed as a temporary measure that addresses the current
market conditions while leaving the wrapped bond outstanding for
its original tenor, often 30 years or more. We have completed two
such transactions, have approved several more which are pending
closing, and are actively working with commercial banks on programs
to offer this product to other Ambac clients. Our recent
transaction for USF Financing Corporation significantly lowered
that issuer�s borrowing costs, saving it millions of dollars this
year alone. In addition to these steps, Ambac has worked on other
consents and structural changes to wrapped bonds that offer the
flexibility our clients need to ride out these adverse market
conditions. These include agreements to change remarketing agents,
and consents to effectuate bond exchanges or refundings when in the
best interest of our clients. About Ambac Financial Group, Inc.
Ambac Financial Group, Inc., headquartered in New York City, is a
holding company whose affiliates provide financial guarantees and
financial services to clients in both the public and private
sectors around the world. Ambac's principal operating subsidiary,
Ambac Assurance Corporation, a guarantor of public finance and
structured finance obligations, has earned triple-A ratings from
Moody's Investors Service, Inc. and Standard & Poor's Ratings
Services; and a double-A rating from Fitch, Inc. Moody's, Standard
& Poor's and Fitch all maintain a �negative outlook.� Ambac
Financial Group, Inc. common stock is listed on the New York Stock
Exchange (ticker symbol ABK). Forward-Looking Statements This
release contains statements that may constitute "forward-looking
statements" within the meaning of the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Any or all of
management�s forward-looking statements here or in other
publications may turn out to be wrong and are based on Ambac�s
management current belief or opinions. Ambac�s actual results may
vary materially, and there are no guarantees about the performance
of Ambac�s securities. Among events, risks, uncertainties or
factors that could cause actual results to differ materially are:
(1)�changes in the economic, credit, foreign currency or interest
rate environment in the United States and abroad; (2)�the level of
activity within the national and worldwide credit markets;
(3)�competitive conditions and pricing levels; (4)�legislative and
regulatory developments; (5)�changes in tax laws; (6) changes in
our business plan, including changes resulting from our decision to
discontinue writing new business in the financial services area, to
significantly reduce new underwriting of structured finance
business and to discontinue all new underwritings of structured
finance business for six months; (7)�the policies and actions of
the United States and other governments; (8)�changes in capital
requirements whether resulting from downgrades in our insured
portfolio or changes in rating agencies� rating criteria or other
reasons; (9)�changes in Ambac�s and/or Ambac Assurance�s credit or
financial strength ratings; (10)�changes in accounting principles
or practices relating to the financial guarantee industry or that
may impact Ambac�s reported financial results; (11)�inadequacy of
reserves established for losses and loss expenses; (12)�default by
one or more of Ambac Assurance�s�portfolio investments, insured
issuers, counterparties or reinsurers; (13)�credit risk throughout
our business, including large single exposures to reinsurers;
(14)�market spreads and pricing on insured collateralized debt
obligations (�CDOs�) and other derivative products insured or
issued by Ambac; (15)�credit risk related to residential mortgage
securities and CDOs; (16)�the risk that holders of debt securities
or counterparties on credit default swaps or other similar
agreements seek to declare events of default or seek judicial
relief or bring claims alleging violation or breach of covenants by
Ambac or one of its subsidiaries; (17)�the risk that our
underwriting and risk management policies and practices do not
anticipate certain risks and/or the magnitude of potential for loss
as a result of unforeseen risks; (18)�the risk of volatility in
income and earnings, including volatility due to the application of
fair value accounting, or FAS 133, to the portion of our credit
enhancement business which is executed in credit derivative form;
(19)�operational risks, including with respect to internal
processes, risk models, systems and employees; (20)�the risk of
decline in market position; (21)�the risk that market risks impact
assets in our investment portfolio; (22)�the risk of credit and
liquidity risk due to unscheduled and unanticipated withdrawals on
investment agreements; (23)�changes in prepayment speeds on insured
asset-backed securities; (24) factors that may influence the amount
of installment premiums paid to Ambac; (25)�the risk that we may be
required to raise additional capital, which could have a dilutive
effect on our outstanding equity capital and/or future earnings;
(26)�our ability or inability to raise additional capital,
including the risks that regulatory or other approvals for any plan
to raise capital are not obtained, or that various conditions to
such a plan, either imposed by third parties or imposed by Ambac or
its Board of Directors, are not satisfied and thus potentially
necessary capital raising transactions do not occur, or the risk
that for other reasons the Company cannot accomplish any
potentially necessary capital raising transactions; (27)�the risk
that Ambac�s holding company structure and certain regulatory and
other constraints, including adverse business performance, affect
Ambac�s ability to pay dividends and make other payments; (28)�the
risk of litigation and regulatory inquiries or investigations, and
the risk of adverse outcomes in connection therewith, which could
have a material adverse effect on our business, operations,
financial position, profitability or cash flows; (29)�other
additional factors described in the Risk Factors section of Ambac�s
Current Report on Form 8-K dated March 12, 2008 and in its Annual
Report on Form 10-K for the fiscal year December 31, 2007 and also
disclosed from time to time by Ambac in its subsequent reports on
Form 10-Q and Form 8-K, which are or will be available on the Ambac
website at www.ambac.com and at the SEC�s website, www.sec.gov; and
(30)�other risks and uncertainties that have not been identified at
this time. Readers are cautioned that forward-looking statements
speak only as of the date they are made and that Ambac does not
undertake to update forward-looking statements to reflect
circumstances or events that arise after the date the statements
are made. You are therefore advised to consult any further
disclosures we make on related subjects in Ambac�s reports to the
SEC.
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