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MBIA Seeks New Capital to Support its Credit Ratings.
Armonk, NY -- MBIA Inc., whose credit guarantees stand behind billions of dollars in subprime mortgage bonds, posted a $2.3 billion loss in the fourth quarter, blaming the problem partly on the performance of second liens and "CDO squared" transactions.
In the fourth quarter alone, it marked down the value of insured credit derivatives by $3.4 billion, saying the move resulted "from wider spreads for CMBS and RMBS collateral" and downgrades related to bonds held in collateralized debt obligation structures.
Meanwhile, UBS has warned it may take a net loss for the year due in part to estimated losses on U.S. mortgage-related positions totaling $14 billion: $12 billion of the losses were on positions related to the U.S. subprime mortgage market. The other $2 billion in losses were on other positions related to the U.S. residential mortgage market.
In addition to the writedown, MBIA also said last week that it has moved to shore up its capital, selling $500 million in common stock to investment fund Warburg Pincus Inc. If MBIA's credit ratings slip, holders of CDO and ABS bonds it insures may be forced to take writedowns on those securities.
MBIA executives in a lengthy earnings conference call sought to reassure investors that it would have enough capital to survive what they called ...
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Source: HighBeam Research, MBIA Seeks New Capital to Support its Credit Ratings.