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CHICAGO, April 4 (Reuters) - Bond insurer Ambac (ABK.N: Quote, Profile, Research) said Friday it established a team to address issues its municipal clients are facing in the auction-rate and variable-rate debt markets.

"Many of Ambac's clients are suffering from penalty interest rates that have increased the financing costs of even highly rated borrowers," said Michael Callen, Ambac's chairman and chief executive officer, in a statement.

"We have been processing consents for a wide range of issuers and have successfully approved numerous amendments. Having a dedicated team will allow us to further streamline our efforts in response to an upsurge in requests for assistance."

Interest rates on municipal bond issuers' auction-rate debt zoomed higher when that market was hit with a liquidity crunch. As a result, scores of issuers have or made plans to restructure their debt into other interest-rate modes or even to bid on their own debt to get it out of that market.

Ambac said potential approaches for its clients included adding temporary or permanent liquidity enhancements, facilitating repurchases by the issuers of their wrapped securities and helping issuers switch to intermediate-term interest rates. Ambac added it will work with issuers to create solutions tailored to their varying risk profiles and that a menu of options will be presented to issuers in the coming week. (Reporting by Karen Pierog; Editing by Dan Grebler)