So apparently the Ambac bond issue that I own (CUSIP 023139AF5) has a very special term included. Ambac can apparently defer payment for up to ten (10) years without triggering technical default.
So, I apologise very much, ABK! You're not in technical default. You're simply deferring your payment for up to ten years. Congratulations on the ingenuity.
And once again, another ForexDiva Colossal Failure moment...
The thing that ticks me off most is that there's seemingly nothing to do about it.
Since I've had a few of these bought the cow for less than a gallon of milk situations, I am now going to be much more diva about corporate bonds. The first and most important step is to check the book value and ensure there's a good margin to work with. Scrutinise every last dot on their balance sheet and go through their budget line by line.
Hmmm... that sounds a bit familiar, doesn't it? Oh, yes, that's how you run up the 10 year national deficit to $9 trillion.
Fine, laugh all you want at my trading...
3 comments:
Good to see someone is following ABK.GI (CUSIP 023139AF5). I was wondering why they were trading flat and only at $0.07 on the dollar. Ten years is quite some time, though hopefully investors will be able to claim more than that if they file for bankruptcy in 2011 as the company admits is a possibility. I'll ride mine out and see what I end up with.
I let go of this bond issue several days back. If I'm not mistaken, this is a subordinated bond issue. With another subordinated bond issue on ION Media, I recently had no recovery value, which was partly why I cashed out on this ABK bond issue. I feel I should have done it sooner. As you know, ABK has a negative book value, which means that it's very possible this bond issue will suffer a similar fate as the ION Media case. I do think ABK is very resilient, however. Every analyst has basically been saying for at least a year that it's only a matter of time before ABK files for bankruptcy. ABK defied the odds and recently even posted a $2.2 billion profit. So, yeah, it's possible there'll be a recovery. Their balance sheet was too fuzzy for me to figure out though. In my case, I had paid over $0.30 on the dollar for this bond issue. I felt I overpaid and I saw another opportunity and took it. Best of luck with your bonds though! Do you trade in high-yield very often?
I still have ABK shares btw...
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