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ambac filed chapter 11
Old 11-11-2010, 08:48 PM   #1
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ambac filed chapter 11

I have a Highland California 5% Muni Bond that is insured by ambac (who just filed chapter 11). Should I be concerned?
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Old 11-11-2010, 08:52 PM   #2
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Is the bond still performing? What is the likelihood of default? Yes, you have lost a layer of protection (or at least a portion thereof), but it may be irrelevant. One thing to keep in mind is that municipalities often obtained bond insurance to increase their credit rating and obtain a lower interest rate on their debt, even though they may already have been a very low default risk without the bond insurance.
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Old 11-11-2010, 10:03 PM   #3
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What percentage of your portfolio is this bond?
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Old 11-12-2010, 04:44 AM   #4
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I also have municipal bonds and I would assume that some of them are insured by ambac. Getting concerned also.

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Originally Posted by Earl E Retyre View Post
I have a Highland California 5% Muni Bond that is insured by ambac (who just filed chapter 11). Should I be concerned?
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Old 11-12-2010, 05:32 AM   #5
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I also have municipal bonds and I would assume that some of them are insured by ambac. Getting concerned also.
My guess is that the other major insurers like MBIA, are probably only one or two muni defaults away from bankruptcies themselves.
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Old 11-12-2010, 08:51 AM   #6
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Originally Posted by Earl E Retyre View Post
I have a Highland California 5% Muni Bond that is insured by ambac (who just filed chapter 11). Should I be concerned?
+1 to Gumby's comments.

Also check the credit ratings of your issue. Considering the long-standing trouble of AMBAC the ratings likely already assume no, or little, support from AMBAC.
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Old 11-12-2010, 09:34 AM   #7
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Crumpyguy, the answer to your question is 2%.
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