How to keep the "AAA" rating by Jana Passova

MBIA Inc. is in financial world known as a financial guarantor and a leading provider of fixed-income investment management services. The whole business is rotating around a credit enhancement of municipal bounds and asset-and mortgage-backed transactions in the new issue and secondary markets. It is one of few companies that got the "AAA" financial strength rating. The company finished 2006 as a very strong player on a financial playground. It earned $849.3 million, which is $5.99 per share and lost $1.9 billion, it means $15.22 per share. Not a bad score. Beginning of this year wasn't so successful. It loses $2.3 billion on write-downs, or $18.61 per share compared with earnings of $181 million, or $1.32 per share, during the same period the previous year. During the last quarter was the MBIA credit portfolio reduced by $3.5 billion, reducing earnings by $18.04 per share. MBIA starts to use a new strategy called CDO which is also known as a complex financial instruments that combine various forms of debt. These activities should increase their capital position over $2 billion. MBIA has also problem with its "AAA" rating. That is why it tried to raise more than $1.5 billion in recent month. The company used the offering of surplus notes and also a direct investment by private equity firm Warburg Pincus to get this issue. According to Meredith Whitney, who works as an analyst of Oppenheimer & Co., banks should take up to $70 billion in extra write-downs because of the bond precarious insurers.

by Jana Passova for PocketNews (http://pocketnews.tv)

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