MBIA Inc. (NYSE:MBI) Battles Puerto Rico Crisis


Dallas, Texas 02/10/2014 (FINANCIALSTRENDS) MBIA Inc.(NYSE:MBI) Armonk, NY based financial guarantee insurance business and is also in the asset management advisory services segment. The services are now worked through three of its business segments- United States public finance insurance, international insurance as well as structured finance and advisory services.

Caught in the Puerto Rico crisis

MBIA Inc.(NYSE:MBI) and peers Assured Guaranty, Ambac are together wading through the financial crisis in Puerto Rico.  Though the government has announced that a ‘budget balance’ for 2014-2015 fiscal is likely, the question remains before these financial guarantors: what to make of the $2bn debt offer. If the Puerto Rico government defaulted, then the high funding these guarantors   have offered will cause a lot of worry.

Industry experts interpret the government’s debt offer as the means by which it shall gain time to work through the crisis to boost economy.  Accordingly, the island government may also consider U.S. Treasury Department and Congress to bolster finances.

Morgan Stanley volunteers debt-financing

News of financial firm Morgan Stanley networking with other Hedge funds, PE and other investors to bring in over $1.5 billion as financing to the beleaguered region made financial headlines in December last.  However, the interest for such volunteer-investment would be high – to the tune of 10%.

MBIA Inc.(NYSE:MBI) along with other guarantors will hope that the commonwealth of Puerto Rico will take the high-interest carrying fund which Morgan Stanley would like to bring-in as  it is believed that the funds currently held by the government will hold good until June of 2014.

Makes small gains

Meanwhile, MBIA Inc.(NYSE:MBI) in the last week of December recorded small gains, when it earned $72 million,  as it sold claims against the bankrupt ResCap estate. As the guarantor MBIA had paid down outstanding loan of $500 million at Blue Ridge Investments according to SEC From 8-K.