Ambac Commutes $16.4B In ABS

Law360, New York (June 8, 2010, 7:28 PM EDT) -- Ambac Financial Group Inc. has commuted its remaining $16.4 billion of exposure to collateralized debt obligations of asset-backed securities, although the battered bond insurer has not yet ruled out the possibility of filing a bankruptcy petition.

Under the agreement, revealed in a regulatory filing with the U.S. Securities and Exchange Commission on Tuesday, Ambac Financial will pay $2.6 billion in cash and issue $2 billion in surplus notes to several counterparties to the credit default swaps backed by its subsidiary Ambac Assurance Corp.

The Wisconsin-based Ambac...
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