Double Feature:

First Post of the Day from Bloomberg:

Ambac fell $2.02 to $8.70 today in New York Stock Exchange composite trading. The shares have tumbled 90 percent in the past year. A $1 billion equity offering would about double the amount of shares outstanding.

Credit-default swaps tied to Ambac's AAA rated insurance unit rose 10 basis points after the announcement to 530 basis points, according to CMA Datavision in London. A basis point on a credit-default swap contract protecting $10 million of debt from default for five years is equivalent to $1,000 a year.

Bank Losses

Credit-default swaps are financial instruments based on bonds and loans that are used to speculate on a company's ability to repay debt. They pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements. A rise indicates deterioration in the perception of credit quality; a decline, the opposite.

Banks would lose as much as $70 billion if the top-rated bond insurers lose their credit ratings, Oppenheimer & Co. analysts estimated in January. MBIA's ratings were affirmed by Moody's and S&P last week.

Continue

Better Yet Check out this Video:



Hat Tip to Value Plays