Monday, 12 May 2008

Not dead (just)

Bloomberg reports MBIA had a substantial first quarter loss yet the stock went up:
MBIA Inc., the ailing bond insurer, rose in New York Stock Exchange trading after saying it will pump $900 million into its insurance unit and reporting a first-quarter loss that was narrower than some analysts' estimates.
(The $900M is a downstreaming of cash from the parent into the insurer. That money cannot now be dividended to shareholders unless regulators are comfortable with the capital adequacy of the insurer: the funds came from a $1.1B capital raising in February.)
MBIA, whose market value has slumped 87 percent in the past year, gained as much as 9.8 percent as the company reported a net loss of $2.4 billion and an operating loss of $3.01 a share.
It seems that anything less than a cataclysm is a cause for celebration with the monolines at the moment.

Update. Bloomberg now reports:
MBIA Inc. and Ambac Financial Group Inc. had ``meaningfully'' higher losses on home-equity loans and collateralized debt obligations than anticipated, raising concern about their Aaa status, Moody's Investors Service said.

The losses elevate ``existing concerns about capitalization levels relative to the Aaa benchmark,'' Moody's said in a statement today.
So instead of being, say, $10B short of AAA they are now $12 1/2 ? Big deal. Sabre rattling won't make up for the downgrade that should have come months ago.

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