MBIA boosts stock offering
Bond insurer MBIA Inc., which has been trying to raise capital to maintain its crucial "AAA" financial strength rating, said Thursday it has boosted the size of a public stock offering to $1 billion from the $750 million it announced one day earlier.
MBIA (MBI) said it priced the offering of 82.3 million shares at $12.15 apiece. Underwriters JPMorgan Securities Inc. and Lehman Brothers Inc. have a 30-day option to buy up to another 12.35 million shares, which would raise another $150 million.
Warburg Pincus, which has already directly invested $500 million in MBIA, will purchase $300 million in shares as part of the offering, MBIA said.
Bond insurers essentially need a "AAA" rating to book new business, but as the number of mortgage defaults has increased, ratings agencies have worried bonds backed by the troubled loans will also default, triggering an unmanageable amount of payments from bond insurers bad credit payday loans. Bond insurers pay claims when an issuer defaults.
Fitch Ratings warned earlier this week it might downgrade MBIA from "AAA," and Standard & Poor’s placed MBIA on a negative watch last week. Other bond insurers - including Ambac Financial Group Inc. (ABK), Security Capital Assurance Ltd. (SCA) and Financial Guaranty Insurance Co. - have been downgraded in recent weeks.
Shares of MBIA fell $1.19, or 8.4%, to $13.01 in after-hours trading, following a fall of 8 cents to $14.20 in the regular session.
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