Ambac driving by with $1.19 billion five-year floater; talk Libor plus 450 bps, 75 bps floor at 98

By Paul A. Harris

Portland, Ore., June 25 – Ambac Financial Group, Inc. plans to price $1.19 billion of non-rated five-year senior secured floating-rate notes in a Friday drive-by, according to market sources.

Talk has the deal coming with a 450 basis points spread to Libor atop a 75 bps Libor floor at 98. Spread and floor talk come on top of initial guidance. However, price talk comes cheap to initial price guidance of 98 to 99.

J.P. Morgan Securities LLC, Odeon, BNY Mellon Capital Markets LLC and JMP Securities LLC are the bookrunners for the Rule 144A and Regulation S offering.

The notes come with one year of call protection.

The issuing entity will be special purpose vehicle Sitka Holdings, LLC.

The New York City-based financial services holding company plans to use the proceeds to partially redeem $1.625 billion of the outstanding Ambac LSNI, LLC Libor plus 500 bps tier 1 insured secured notes due 2023, and the secured note issued by Ambac Assurance Corp. concurrently with the issuance of the tier 1 notes. The remaining balance of the tier 1 notes will be redeemed utilizing other available sources of liquidity.

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