The Motley Fool Discussion Boards

Previous Page

Investing/Strategies / Bonds & Fixed Income Investments


Subject:  AMBAC 5.95% Debenture Maturity 2/28/2103 Date:  12/20/2012  12:31 PM
Author:  bluepost22 Number:  34563 of 36767

This asset is sitting on a family member's Vanguard account and they are asking for advice. The line item is:

"DEB 5.95 PFD callable 2/28/08 @ 25.00 MTY 2/23/2103".

A value of $8.00 is shown on the hardcopy. Cost was about $14.00.

A Vanguard rep said they can be sold and have traded as high as $10.00. He had no idea what they would fetch on the market today.

AMBAC seems to be emerging from Chapter 11. They had a good Q3 and have approval from the bankruptcy judge. However, their bankruptcy proposal contains a significant haircut for creditors:

"Its restructuring plan allows for recoveries of between 11.4 and 17.6 cents on the dollar for holders of $1.25 billion in senior notes, and between 8.5 and 13.2 cents on the dollar for general unsecured claimholders, according to court papers.

Those groups, along with holders of $444.2 million in subordinated notes, could also stand to receive stock and warrants."

How could these notes have sold for more than 17 cents on the dollar? Would you try to sell now if you can get $8 or just wait?

Other news sources have indicated the possibility of getting equity in addition to the partial recovery for creditors.

Thanks for any ideas or pointers.
Copyright 1996-2020 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us