MBIA to Raise Additional $750 Million of Capital

MBIA to Raise Additional $750 Million of Capital

Feb. 6 (Bloomberg) -- MBIA Inc., the world's biggest bond insurer, plans to raise an additional $750 million by selling about 50.3 million common shares, bolstering capital in an attempt to retain its AAA credit rating.

Investment firm Warburg Pincus will backstop the offering by purchasing as much as $750 million of convertible participating preferred stock, the Armonk, New York-based company said in a statement today. MBIA, which has already raised at least $1.5 billion since November, said it would contribute most of the proceeds to its MBIA Insurance Corp. unit.

The company is boosting capital after credit rating companies raised their forecasts for losses on securities linked to subprime mortgages. The announcement comes a day after Fitch Ratings placed MBIA's AAA insurance ranking back under review for a possible downgrade after affirming the grade late last year. Standard & Poor's said on Jan. 31 MBIA needed more capital.

``The most significant fact is that they're raising the amount of capital from what they previously announced,'' Wilbur Ross, an investor in distressed companies, said in an interview with Bloomberg TV. ``I would be astonished if they hadn't consulted with the rating agencies before they made this announcement,' he said, adding that MBIA may retain its AAA.

MBIA last month reported a fourth-quarter net loss of $2.3 billion, or $18.61 a share, its biggest-ever. The results led to a full-year net loss, snapping a streak of annual profitability dating back to at least 1991 that had been buoyed by the regular premiums from insuring municipal debt.

The company said today that it raised its after-tax operating loss estimate for the fourth quarter by $65 million to $472.8 million.

BLOOMBERG