Ambac Offering: Is That It?

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Ambac Financial Group, the so-called monoline bond insurer which has operating under the shadow of a credit-rating downgrade that would likely wipe-out its business, announced plans to sell $1.5 billion of common stock and equity units to bolster its capital. The market promptly threw up all over the trading floor.
It’s a safe bet that Ambac has the offering fully subscribed at this point. If they didn’t have commitments from buyers they wouldn’t have given us the $1.5 billion figure. But the announcement fell short of the hopes and rumors that had become ubiquitous on Wall Street in the last two weeks. Reports had lead many to believe that Ambac would be receiving an immediate capital infusions from a consortium of banks. Instead we got a prospectus for a public offering. The market was looking for between $2 billion and $3 billion. It got one and half billion. It looks like the private equity money walked away from the deal, leaving Ambac short of market expectations.
The ratings agencies seem to be split. Moody's Investor Services said it believes that if the offerings are successful they would be able to affirm the company's top-notch AAA rating. Fitch immediately announced that Amac would unlikely to recover its AAA rating with this move—they’re keep Ambac at AA and on negative credit watch. Standard & Poor’s, which affirmed Ambac’s ratings last week, hasn’t said anything.
Shares of Ambac promptly dropped as much as 20 percent but have started to recover a bit.
The prospectus for the equity units is here. And the common stock prospectus is here.

Update:
Barry Ritholtz wonders if there might not be some kind of market manipulation behind the rumors that saw Ambac's shares run-up earlier today.

WSJ Marketbeat announced "Ambac Bailout Imminent! Maybe! Possibly!"
Then we learn that the deal was dead, and that Ambac needs to raise $1.5 billion dollars. Thus, all of those rumors and CNBC appear to have been patently false.
But here's the question that keeps coming up: Who are the people leaking this information? And, is this legal? Now, we have learned that all of these attempts at manipulating the market were based on rumors that proved to be false.

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