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Ambac: Financial Winners & Losers

Ambac shares rose after the bond insurer said it commuted $16.4 billion in debt securities.

(Ambac and other stock prices brought current in this update.)



) --

Ambac Financial


was among the winners of the financial sector Tuesday after the bond insurer said it commuted $16.4 billion in debt securities.

Ambac Financial

said late Monday it has commuted all of its remaining $16.4 billion of exposure to collateralized debt obligations of asset-backed securities. Ambac agreed to pay $2.6 billion in cash and $2 billion in newly issued surplus notes to counterparties on collateralized debt obligations based on asset-backed securities.

Ambac also said that approximately $1.4 billion in other asset-backed securities for cash payments of $96.5 million. The bond insurer said it expects to commute other securities in the next 12 months for approximately $115 million of cash and $60 million of surplus notes from Ambac Assurance Corp.

Shares of Ambac touched an intraday high of $1.27 before pulling back after the company also noted that its liquidity may run out prior to the second quarter of 2011. In that event, Ambac said it may consider raising additional capital or a negotiated restructuring of its debt through a prepackaged bankruptcy. Lately, the stock was up 5 cents, or 4.9%, to $1.08.

Fellow bond insurer


(MBI) - Get MBIA Inc. Report

was down 5.9% to $5.61.

Among bank stocks,

JPMorgan Chase

(JPM) - Get JPMorgan Chase & Co. (JPM) Report

was rising 0.8% to $37.09 even after Rochdale Securities analyst Dick Bove cut his stock price target to $47 from $55, citing both long- and short-term issues. Bove said near-term concerns stem from the bank's consumer portfolio, capital markets, and Europe.

"The longer term issues could be bigger,"

Bove wrote in a research note

late Monday. "If derivatives activities are cut back, as indicated in the current legislation, it could reduce profit by an estimated 10%. The stock is selling at such a low price to book value that it remains attractive. However, the challenges the company faces are substantial."

On the other hand, shares of

Goldman Sachs

(GS) - Get Goldman Sachs Group, Inc. (GS) Report

continued to slide one day after the Financial Crisis Inquiry Commission said it has subpoenaed the bank for failing to comply with document requests from the panel.

"Over the last several months, the Financial Crisis Inquiry Commission has made numerous requests for documents from Goldman Sachs & Co. and for interviews of key personnel," the FCIC said in statement, offering a chronological summary of contact between the FCIC and Goldman dating back to late January.

Goldman Sachs shares were off 2.3% to $135.47.

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Other major U.S. bank stocks were trading mixed.


(C) - Get Citigroup Inc. Report

rose 1.1% to $3.68 and

Bank of America

(BAC) - Get Bank of America Corp Report

was up 0.9% to $14.97, while

Morgan Stanley

(MS) - Get Morgan Stanley (MS) Report

fell 0.9% to $25.07 and

Wells Fargo

(WFC) - Get Wells Fargo & Company Report

slipped 0.6% to $27.14.



(V) - Get Visa Inc. Class A Report

tacked on 0.1% to $71.96 after the company said in a filing with the

Securities and Exchange Commission

that global processed transactions on its electronic payments network leapt 15% in May versus the same period a year earlier.


added that U.S. credit payments volume rose 6% last month, while debit payments volume surged 22%.



(MA) - Get Mastercard Inc. (MA) Report

fell 1.8% to $196.43.

-- Written by Robert Holmes in Boston


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