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ACA Capital Likely to Go Bankrupt-Ackman

NEW YORK
Wed Nov 28, 2007 6:01pm EST

NEW YORK (Reuters) - Bond insurer ACA Capital Holdings Inc ACA.N is likely to go bankrupt, Pershing Square Capital's William Ackman said on Wednesday.

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ACA Capital has written protection on some $68 billion of repackaged debt known as collateralized debt obligations. The market prices of those assets have suffered recently in part because of concern about the subprime mortgage crisis. ACA posted a $1 billion loss in the third quarter.

Pershing Square has had a short position on bond insurers for years, in a bet the share prices of bond insurers will decline.

(Reporting by Michael Flaherty, writing by Dan Wilchins, editing by Maureen Bavdek)
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