Swaps Traders Look to Pull Ambac Trigger
NEW YORK (TheStreet) -- Traders that hold over $1.5 billion in credit default swaps against Ambac Financial Group (ABK) debt are looking for a derivatives industry body to give them the green light to collect.
UBS AG (UBS) has submitted a request to a derivates-industry arbiter, asking "Has a Bankruptcy Credit Event occurred with respect to Ambac Financial Group, Inc.?"
That question is key since credit default swaps must be triggered before counterparty can collect on a trade.
The request was submitted today trough the International Swaps and Derivatives Association, according to its web site.At the end of October, there was a total $1.56 billion in credit default swaps on Ambac debt outstanding, according to Bloomberg which cites Depository Trust Clearing Corp. data. "The Americas Credit Derivatives Determinations Committee is currently reviewing the question regarding Ambac Financial Group. No announcement has been made at this time but any updates will be posted on [the] ISDA website," according to a statement from the ISDA. Credit-default swaps pay the buyer if a referenced company fails to meet its payment on outstanding debt, or if it encounters a specific credit event such as bankruptcy. Yesterday, Ambac filed for Chapter 11 bankruptcy , one week after announcing it would miss an interest payment on a portion of its outstanding debt.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV