Shares of Ambac Financial Group (NYSE: ABK, Stock Forum) jumped 53.2% to $2.13 Tuesday after the company released information late yesterday about collateral requirements and terminations of its investment agreement business related to recent actions by the rating agencies, “in response to persistent and unfounded speculation” regarding its liquidity situation.

"Despite the challenging current environment, it is important for us to continually communicate that we have ample liquidity to manage our commitments going forward," says the company’s chairman and chief executive officer, Michael Callen.

The company notes that rating agency actions affecting Ambac Assurance Corporation in June resulted in $506 million of increased collateral posting requirements in the investment agreement business and investment agreement terminations of $270 million. AAC was downgraded by Standard & Poor's to AA on June 5, resulted in an incremental collateral posting requirement of approximately $76 million, says the company, while Moody's downgrade of AAC to Aa3 on June 19 resulted in an incremental collateral posting requirement of approximately $70 million and investment agreement terminations of approximately $270 million. The action by Fitch to withdraw the ratings of AAC on June 26 resulted in an incremental collateral posting requirement of approximately $360 million, says Ambac.

The book value of investment agreement liabilities as of May 31 amounted to $6.9 billion, down from $7.7 billion as of December 31, says Ambac. The market value of the investment agreement asset portfolio, including cash of approximately $400 million, as of May 31, is approximately $5.6 billion. The market value of interest rate derivative contracts held by the investment agreement business is $160 million, says the company’s news release.

Ambac says in the event of cash and/or security shortfalls in the investment agreement business, it anticipates using the resources of AAC through inter-company transactions.