Ambac CDS payments triggered by reg seizure-ISDA

NEW YORK, March 26 (Reuters) - The regulatory seizure of toxic guarantees Ambac Financial Group ABK.N sold through its insurance unit will trigger payments on CDS hedges that banks and others had entered on the contracts, the International Swaps and Derivatives Association said on Friday.

Regulators in Wisconsin said on Thursday they are taking control of roughly $64 billion of the worst assets of Ambac Assurance Corp in a move that will preserve cash for municipal and other policyholders, while avoiding making full payments on the toxic portfolio. For details, see [ID:nN25237354]

An industry committee responsible for determining when CDS payments are triggered decided on Friday that the action constitutes a bankruptcy under terms of the CDS contracts, ISDA said in a release. (Reporting by Karen Brettell; Editing by Chizu Nomiyama)