MBIA Inc. - Buying Is A No-Brainer
MBIA's Valuation And Puerto Rico Risks - Clarity Is Coming
Jeff Boyd • 13 Comments
Jeff Boyd • 13 Comments
MBIA's Massive Head-Fake
Oct. 21, 2015, 12:33 PM
- The Government Development Bank and a group of creditors had been trying to come up with an exchange offer for nearly $3B in GDB debt. Investors would have had to take a haircut as part of the deal (the paper is currently trading at 43% of par).
- At issue, says Nuveen's John Miller, the GDB has more than a $350M payment due on Dec. 1, and probably won't have the cash for it without a restructuring.
- GDB's walking away from the table is likely to cause its debt to fall further in price, which in turn is likely to help its side in negotiations.
- Monoline insurers: MBIA (MBI -0.5%), Assured Guaranty (AGO -0.6%), Ambac (AMBC -1.3%).
Oct. 15, 2015, 11:30 AM
- While not a done deal, the superbond idea under discussion - in which payment would be made from an account holding some of Puerto Rico's tax receipts and administered by the U.S. Treasury - could mean better capital market access for Puerto Rico, says BTIG's Mark Palmer.
- It's a potential positive boost for those with large insured exposure to Puerto Rico - MBIA (MBI +0.8%), Assured Guaranty (AGO +1.4%), and Ambac (AMBC -0.7%) - but the size of the haircut would have to be known before figuring the actual impact on the group.
- Previously: Treasury weighs restructuring of Puerto Rico (Oct. 15)
Sep. 4, 2015, 3:20 PM
- Ambac (AMBC -2%) and MBIA's (MBI -6.5%) National Guaranty could each be on the hook for more than $10B for Puerto Rico's capital-appreciation bonds.
- The paper was originally sold for pennies on the dollar, because of their balloon payments at maturity, and the companies used the price at issuance for disclosing potential payouts. The big jump to more than $10B occurs once those balloon interest payments are included.
- “The difference between principal at issuance and the amount due at maturity is enormous” on capital-appreciation bonds, says Tamara Lowin, director of research at Belle Haven Investments. “Ignoring the accreted value is irresponsible.”
- Both National and Ambac are confident they can weather the Commonwealth's restructuring and note the biggest balloon payments aren't due for decades. Assured Guaranty (AGO -1.5%) says its exposure to the capital-appreciation bonds is minimal.
- Source: Bloomberg
- Previously: Puerto Rico banks, monolines surge as PREPA and creditors cut deal (Sept. 2)
Sep. 2, 2015, 12:40 PM
Sep. 2, 2015, 11:29 AM
- The Puerto Rico Electric Power Authority and a group of creditors earlier reached a deal to keep which will keep the debt service payments coming, though the haircut on principal looks to be 15%.
- OFG Bancorp (OFG +22.2%), First Bancorp (FBP +9.8%), Popular (BPOP +5.9%)
- MBIA (MBI +13.6%), Assured Guaranty (AGO +4.5%), Ambac (AMBC +3.1%)
Sep. 2, 2015, 7:47 AM
- Under the deal in which PREPA would issue new securitized debt, bondholders will taking a haircut of up to 15%, reports Reuters.
- The group of bondholders involved in the agreement represent 40% of PREPA's debt and includes sizable asset managers and hedge funds. Roughly $8B of PREPA's $9B in debt is held by bondholders.
- Still unclear is how the restructuring will impact bond insurers like Assured Guaranty (NYSE:AGO) and MBIA (NYSE:MBI).
Aug. 13, 2015, 9:37 AM
- MBIA (MBI -2.7%) has agreed to buy 7.6M of the 18.4M shares being sold by Warburg Pincus as the P-E firm unloads the rest of its stake in the company.
- This purchase will bring total buybacks to 10.4M shares since the company reported its Q2 on Aug. 4. The average price of the buys is $6.42.
- Following this deal, the float will be 158M shares and MBIA will have another $33M remaining in its buyback authority.
- Previously: Buybacks boost results at MBIA (Aug. 5)
Aug. 5, 2015, 8:32 AM
- Q2 combined operating income of $19M or $0.11 per share vs. $2M or $0.01 one year ago. Most of the improvement was driven by a lower tax provision this year vs. last.
- Adjusted book value per share of $27 vs. $25.78 in Q1 and $24.87 at the start of the year. At work are buybacks - 8.6M shares in Q1 and another 11.6M last quarter (at an average price of $8.76 each). The float is about 169M shares. Last night's close of $6.11 is a 77% discount to ABV. The company late last month authorized another $100M buyback.
- Reiterating his Buy rating and $10 price target, BTIG's Mark Palmer says the stock has already priced in a severely dire outcome for Puerto Rico.
- Conference call is underway
- Previously: MBIA beats by $0.02, misses on premium earned (Aug. 4)
- MBI flat premarket
Aug. 4, 2015, 4:30 PM
- MBIA (NYSE:MBI): Q2 EPS of $0.11 beats by $0.02.
- Premium earned of $91M (+2.2% Y/Y) misses by $3.8M.
Aug. 3, 2015, 5:35 PM
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Jul. 29, 2015, 8:40 AM
- The new authorization replaces a previous one which had $61M remaining.
- MBIA (NYSE:MBI) year-to-date has bought back 23.4M shares at a total cost of $197M.
- The stock's higher by 1.6% in thin premarket action.
Jul. 23, 2015, 11:41 AM
- Details leaking from negotiations between the Puerto Rico Electric Power Authority and creditors look to be a pretty big positive for the bond insurers as even PREPA's proposal calls for bond repayments at par after deferral of principal payments for five years.
- It's enough to make BTIG's Mark Palmer once again a bull on the stock, and he upgrades MBIA (MBI +16%) to Buy. His $10 price target is based on 50% of adjusted book value per share of $25.78, and assuming losses of $6.35 per share due to losses on the MBI's insured exposure to Puerto Rico.
- Assured Guaranty (AGO +2%)
Jul. 16, 2015, 2:28 AM
- U.S. senators have introduced a bill to allow Puerto Rico's public entities to file for bankruptcy under federal laws as the commonwealth starts negotiations with creditors to restructure its $72B in debt.
- "What we are proposing is that those public corporations and municipalities in Puerto Rico be given the same access to Chapter 9 as any similar entities in the U.S.," Senator Richard Blumenthal declared.
Jul. 14, 2015, 2:10 AM
- In the first meeting with investors since calling its $72B debt pile "not payable", Puerto Rico said it was still premature to discuss how creditors would be affected, but made the case for a debt restructuring.
- The island's crisis is being broadly felt because Puerto Rico bonds are held by many U.S. investors, who bought the securities because they’re tax-exempt nationwide and offered higher yields than comparable debt.
Jul. 8, 2015, 3:24 PM
Jul. 7, 2015, 2:45 PM
- A U.S. Court of Appeals last night affirmed a lower court ruing striking down the Puerto Rico Public Corporation Debt Compliance & Recovery Act of 2014 which would have created a bankruptcy-like process for the island's public corporations.
- It's good news for the likes of MBIA (MBI +1.9%), Assured Guaranty (AGO +1.1%), and Ambac (AMBC +0.8%), writes Mark Palmer from BTIG, but the appeals court also said Puerto Rico's inability to authorize its municipalities to file for Chapter 9 protection is unconstitutional.
- "Puerto Rico should be free to authorize its municipalities to file for bankruptcy protection under the existing Chapter 9 of the Bankruptcy Code if that is the judgment of its Legislature.”
MBIA, Inc. is a holding company, which through its subsidiaries, provides financial guarantee insurance, as well as related reinsurance, advisory and portfolio services and asset management advisory services, for the public and structured finance markets. It operates through four segments: U.S.... More
Industry: Surety & Title Insurance
Country: United States
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