Bond Insurer Gets Private Equity Bailout

Banknet360 reports:

The nation’s largest bond insurer, MBIA Inc., sought to quell worries about its credit rating on Tuesday, announcing it will receive a $1 billion infusion of capital from private equity firm Warburg Pincus.

The news came only a week after Moody’s Investors Service warned that MBIA may be in danger of losing its top-flight credit rating, after a review by the ratings agency found that the insurer may be “at greater risk of exhibiting a capital shortfall” than previously thought.

MBIA sought to put that fear to rest with the new private equity deal.

Under the terms of the deal, Warburg Pincus will buy 16.1 million shares at $31 each for a total of $500 million and will also receive warrants to buy 8.7 million shares at $40 each, as well as “B” warrants to buy 7.4 million shares at $40 each.