So Goes Ambac, So Goes Citigroup
Following up on Sillybank AKA Citigroups troubles
and possible reluctance of middle eastern investors to bail them out... The latest Ambac bailout scuddle... hattip to Bloomberg.
Citigroup and Barclays are trying to arrange a capital raising of about $2.5 billion and Ambac are considering a rights offering to sell stock to existing shareholders.
Ambac plans to sell $1.5 billion of common stock and equity units to bolster its capital. The sale will be split into $1 billion of shares and $500 million of units.
Banks would lose as much as $70 billion if the top-rated bond insurers, which include MBIA Inc. and FGIC Corp., lose their AAA credit ratings.
The loss of Ambac's AAA rating would cast doubt on $556 billion of municipal and asset backed securities insured by the company,
forcing some investors (Citigroup & Barclays) to fire sale debt and others to reduce their holdings.
Of the $22 billion of Ambac-insured CDOs linked to the mortgage market, about $7.5 billion were underwritten by Citigroup.
Of those CDOs, $6.9 billion are experiencing so- called events of default.
and possible reluctance of middle eastern investors to bail them out... The latest Ambac bailout scuddle... hattip to Bloomberg.
Citigroup and Barclays are trying to arrange a capital raising of about $2.5 billion and Ambac are considering a rights offering to sell stock to existing shareholders.
Ambac plans to sell $1.5 billion of common stock and equity units to bolster its capital. The sale will be split into $1 billion of shares and $500 million of units.
Banks would lose as much as $70 billion if the top-rated bond insurers, which include MBIA Inc. and FGIC Corp., lose their AAA credit ratings.
The loss of Ambac's AAA rating would cast doubt on $556 billion of municipal and asset backed securities insured by the company,
forcing some investors (Citigroup & Barclays) to fire sale debt and others to reduce their holdings.
Of the $22 billion of Ambac-insured CDOs linked to the mortgage market, about $7.5 billion were underwritten by Citigroup.
Of those CDOs, $6.9 billion are experiencing so- called events of default.
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