Municipal Bond Forum
Effect of Ambac filing on defaulted bonds uncertain
Q
I own some Ambac-insured bonds that, I am told, have technically defaulted, but so far have continued to pay interest. The bond I have is 100M of Alabama Water Pollution Control Authority (Jefferson Co.) 4.25 of 2/15/15, Cusip 010653QZ9. A Material Event Notice on this bond was issued on Oct. 4, 2010, regarding this default. The bond has not traded since this notice was issued. Any thoughts concerning this issue? Can Ambac bail me out if necessary?
A
James A. Klotz responds:
Unfortunately, no one can answer this question because there are still too many variables. We might get a better sense of things after the court challenge from the mortgage bond holders mentioned in our commentary.
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