By Walter Hamilton
Los Angeles Times Staff Writer
March 6, 2008
NEW YORK ? Troubled bond insurer Ambac Financial Group Inc. said Wednesday that it would raise $1.5 billion in capital by selling shares in an effort to preserve its all-important credit rating, but the plan disappointed Wall Street and its stock price tumbled.
Like other bond insurers, Ambac has significant exposure to faltering sub-prime mortgage securities and needs to boost capital to guard against large-scale defaults.
However, Wall Street expected the company to raise as much as $3 billion, and its apparent inability to do so at an acceptable price underscored its financial predicament.
Investors also were dismayed that the plan didn’t appear to have heavy involvement by big Wall Street banks, whose participation would signal confidence in Ambac’s prospects.
“The action raises more questions than answers,” said Ed Grebeck, chief executive of Tempus Advisors, a debt-strategy firm in Stamford, Conn. “It doesn’t come anywhere near to achieving the funding that is required.”
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