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MBIA hit again even as PREPA makes payment

  • The Puerto Rico Electric Power Authority made its coupon payment late yesterday amid plenty of speculation it would skip it, but BTIG's Mark Palmer says it doesn't mean a restructuring will be avoided.
  • Also out yesterday, was Puerto Rico's Basic Financial Statements and Required Supplementary Information for the fiscal year ended June 30, and the report acknowledges "heightened liquidity and market access risk as a result of the maturity in July and August 2014 of two short-term credit lines of credit in an aggregate principal amount of $671 million."
  • So why did PREPA make a payment rather than preserve cash? Just getting its "ducks in a row," says Palmer, ahead of what he believes will be a Chapter 2 filing under the just-passed bankruptcy law. "We recommend that investors not make their decisions about their investments in the bond insurers based on what we would characterize as a head fake."
  • MBIA (MBI -4.5%), Assured Guaranty (AGO -2.5%).
Comments (7)
  • tom bernardi
    , contributor
    Comments (184) | Send Message
     
    another downgrade for mbi could put them out of business. negative outlook not looking good
    3 Jul 2014, 01:34 PM Reply Like
  • alamo23
    , contributor
    Comments (17) | Send Message
     
    tom

     

    what would be the new floor for their stock? any more comments on mbi?
    3 Jul 2014, 02:58 PM Reply Like
  • longSears
    , contributor
    Comments (3) | Send Message
     
    Alamo,
    if the prepa fails to pay, the new floor will be 0.
    3 Jul 2014, 04:54 PM Reply Like
  • MuniSeeker
    , contributor
    Comments (2) | Send Message
     
    Here is a vote of confidence in AGO. Wilbur Ross the billionaire expert in bankrupt businesses dumped nearly all his shares "Assured Guaranty (NYSE:AGO) Director Wilbur L. Ross, Jr. sold 10,863,247 shares of Assured Guaranty stock in a transaction that occurred on Monday, June 30th. The stock was sold at an average price of $24.00, for a total transaction of $260,717,928.00". Watch out below!!
    3 Jul 2014, 04:54 PM Reply Like
  • MuniSeeker
    , contributor
    Comments (2) | Send Message
     
    Wilbur Ross the billionaire expert in bankrupt businesses sold virtually all his shares in AGO-
    "Assured Guaranty (NYSE:AGO) Director Wilbur L. Ross, Jr. sold 10,863,247 shares of Assured Guaranty stock in a transaction that occurred on Monday, June 30th. The stock was sold at an average price of $24.00, for a total transaction of $260,717,928.00".
    Disclosure - I bought puts 6/30/14 against AGO to protect my munis. It appears Mr. Ross had serious concerns that day too. Watch out below!
    3 Jul 2014, 04:54 PM Reply Like
  • skibimamex
    , contributor
    Comments (454) | Send Message
     
    "another downgrade for mbi could put them out of business. negative outlook not looking good"

     

    What exactly business would they do? they haven't written a new piece of business since 2008. they dont borrow to fund but are running a portfolio in run-off.

     

    Granted, if they have a 2 notch downgrade at National, can't write any new muni business (or tough to compete with AGO), but there is no new muni business to write currently anyway until interest rates rise when bond insurance can have value.

     

    If they give up the ghost of future relaunch of National, then they should just return excess capital to shareholders.

     

    so I am not exactly sure about "another downgrade" putting them out of business -- they actually had recent ratings upgrades, and now an "outlook" downgrade, not a ratings downgrade. in any case if the ratings downgrade does come, then it may delay impair or delay the prospects of the muni relaunch but it doesn't "put them out of business".

     

    In any case stock probably gets cheaper -- whereas MBIA used to be a levered ride on RMBS put backs, now as it gets cheaper it becomes a play on PR restructuring event. another event trade stock.
    3 Jul 2014, 06:41 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (9388) | Send Message
     
    (AMBC) is also becoming a deeper value thanks to PR.
    3 Jul 2014, 08:12 PM Reply Like
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