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
Wed, Jun. 29, 12:47 PM
- Cloture was invoked by a wider-than-expected 68-32 margin, putting the Puerto Rico debt relief bill on track to pass before the end of the week, when the Commonwealth's government says it will default on its most senior debt payments.
- The White House is a big backer of the bill, and the President is expected to sign quickly once the full Senate passes. The law doesn't authorize or prevent a default, but will provide Puerto Rico with protection from creditor litigation (i.e. hedge funds "suing the Commonwealth to death") while it works out a restructuring.
- It's good news for the bond insurers MBIA (MBI +2.9%), Assured Guaranty (AGO +3.9%), and Ambac (AMBC +5.3%), says BTIG's Mark Palmer, as it avoids what could have been a chaotic debt restructuring.
Wed, Jun. 22, 11:22 AM
- While shares of MBIA (NYSE:MBI) and Assured Guaranty (NYSE:AGO) were hit this week thanks to a breakdown in talks between Puerto Rico and its creditors. The breakdown shouldn't be surprising, writes Mark Palmer at BTIG, but is instead part of the normal back and forth between negotiating parties.
- More notable, says Palmer, is the Commonwealth's latest proposal to certain bondholders which he believes gives investors an idea of what a worst-case scenario will look like.
- Palmer's previous estimate of MBI's loss per share on its Puerto Rico exposure of $5.14 is cut to $4.26. For AGO, it was $6.09, but has been cut to $5.19.
- He reiterates his Buy ratings on both, and lifts the PT on MBI to $14 from $13 (100% upside). The PT on AGO remains at $35 (40% upside).
- MBI +3.25%, AGO +0.55%
Mon, Apr. 25, 3:23 PM
- Calling a potential restructuring of Puerto Rico's debt and a potential default of the company's Zohar II exposure in January 2017 material risks, KBW's Chas Tyson starts MBIA (MBI -7.5%) with a Market Perform rating.
- Zohar I is a CLO which made loans to companies owned by Lynn Tilton's Patriarch Partners. Zohar I filed for bankruptcy late last year after Tilton and MBIA couldn't come to terms. Zohars II and III were not part of that filing.
Mon, Apr. 4, 3:39 PM
- A group of hedge funds sued Puerto Rico's Government Development Bank aiming to halt the GDB from making transfer payments to selected creditors until after the bank's debt has been restructured.
- MBIA (MBI -5.9%), Assured Guaranty (AGO -2.7%), and Ambac (AMBC -3.9%) are all lower, but the suit isn't a negative for the insurers, says BTIG's Mark Palmer, noting media reports are describing it as applying to all of Puerto Rico's debt.
- He notes one reporter's tweet: “A group of hedge funds sues to keep Puerto Rico from making payments to creditors prior to restructuring its debt."
Fri, Mar. 11, 5:38 PM
Tue, Mar. 1, 11:15 AM
- Reiterating a Buy rating on the MBIA (MBI +3.9%), BTIG's Mark Palmer boosts the price target to $13 from $11 (and vs. the current $7.08).
- The company added a new $100M buyback authorization, though CEO Jay Brown says he expects the recent fast pace of repurchases to slow.
- As for National Public Finance, it wrote 26 policies in Q4, up from 19 in Q3, nine in Q2, and five in Q1.
- Palmer's $33 price target is based on 0.50x his estimate of adjusted book value per share of $32.24 (this after estimated losses of $5.49 per share from Puerto Rico exposure).
- Previously: Fast buyback pace boosts book value at MBIA (Feb. 29)
Mon, Jan. 25, 12:28 PM
- Is a PREPA default inevitable now, asks BTIG's Mark Palmer. According to a couple of media reports, PREPA is willing to keep negotiations going, and another report describes the creditors' decision to walk away from the table as "eleventh-hour arm twisting" to pressure PREPA into a quick deal.
- This makes sense, says Palmer, as it's in PREPA's interest to drag this thing out until the Supreme Court rules on Puerto Rico's appeal of its Recovery Act (if the Supreme's uphold lower court rulings, a bankruptcy filing could be an option).
- MBIA (MBI -7.6%) and Assured Guaranty (AGO -4%)
- Previously: PREPA's debt restructuring deal falls apart (Jan. 24)
Dec. 30, 2015, 2:43 PM
- Puerto Rico won't be making 2 of the 13 debt payments due on Jan. 4 - a $35.9M payment on the territory's Infrastructure Financing Authority, and a $1.4M payment on its Public Finance Corporation.
- The rest of the nearly $1B in payments due on Monday will be made, including one to general obligation bondholders in which half of the payment comes from revenues clawed back from other bonds.
- Bond insurance firms Ambac (AMBC -3.1%), MBIA (MBI -2.5%), and Assured Guaranty (AGO -1%), each of which have Puerto Rican exposure, are seeing moderate losses, Earlier today, investor Nick Vouloumanos issued an open letter to Ambac's board calling for Nader Tavakoli (interim CEO since Dec. 2014) to be named permanent CEO.
- Earlier: Puerto Rico debt crisis comes to a head
Dec. 24, 2015, 9:59 AM| Dec. 24, 2015, 9:59 AM | 4 Comments
Dec. 18, 2015, 11:11 AM
- Under the agreement to restructure PREPA's $8.2B in debt, MBIA (MBI +14.8%) and Assured Guaranty (AGO +4.3%) will be on the hook for about $450M in the event of a default, reports Bloomberg.
- MBIA insures $1.4B of PREPA bonds, and Assured $744M.
- The deal sets in motion what would be the largest-ever restructuring in the municipal market as the parties work to avoid default on a $196M interest payment due Jan. 1.
- Ambac (AMBC +6.6%)
- Previously: PREPA extends deadline for restructuring agreement (Dec. 18)
Dec. 1, 2015, 11:53 AM
- The Government Development Bank for Puerto Rico paid all principal and interest due today on certain of its notes.
- "Today’s debt service payments reflect our commitment to honor our obligations notwithstanding the extreme fiscal challenges we face in an effort to facilitate a voluntary restructuring process with our creditors,” says GDB President Melba Acosta Febo.
- MBI +6.3%, AGO +2%, AMBC flat (was down earlier).
Nov. 13, 2015, 11:23 AM
- Puerto Rico has a total of $467M due to creditors on Dec. 1, and another $958M on Jan. 1, with Moody's expecting a default on at least some of the $354M in Government Development Bank bond payments on Dec. 1.
- "We are concerned that that any near-term positive headlines will quickly be usurped by negative ones,” says analyst Ed Groshans. “Any positive momentum achieved from the encouraging signs in recent days could be sapped by missed bond payments between now and January 1. ”
- Higher today by more than 1%, MBIA (MBI +2.1%) is down 18.4% over the last five sessions, and Assured Guaranty (NYSE:AGO) by 9.8%. Ambac (NASDAQ:AMBC) is down 12% during that time.
Nov. 3, 2015, 10:15 AM
- Believing the Puerto Rico Electric Power Authority and the bond insurers will soon come to an agreement in which MBIA (MBI +1.7%) will see minimal, if any, losses, MKM upgrades to Buy. The $12 price target is 55% above last night's close.
- "According to several press reports, the bond insurers have been negotiating to provide PREPA with a surety bond wrap to serve as a reserve fund in order to aid in a broader debt restructuring with PREPA's current creditors," says MKM, expecting a deal prior to PREPA's next scheduled payment in December.
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%)
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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