crashof2008

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    • Fri Mar 14th 16:46 PM | Rating: 0 0
      Commented on:
      MBIA Management's a Safe Short Bet
      I don't understand why, if MBIA is such an awesome AAA company whose stock has been oversold, that if it goes out to the open market (which Nobel Prize winning efficient markets theory says should be fairly priced) it has to pay 14.75% to borrow capital?

      This doesn't sound like a particularly creditworthy rate to me. It seems much more like junk. Yet this is the average price MBIA they paid when they borrowed money recently as part of their restructuring.

      Are the markets lying here?

      Additionally, the largest bond issuer in the muni market is the State of California. Last week they said that they will no longer insure their new municipal bond issues.

      Are you alleging that this dramatic decline in critical new muni business will have a salutary effect on MBIA's bottom line? Apparently New Jersey is now following California's lead.

      This of course does not even address the tens of billions (minimum) that MBIA is exposed in the area of CDSs (credit default swaps)!

      But then again, you are probably hard pressed to intelligently discuss the dramatic differences between a CDO (Collateralized debt obligation) and a CDS (credit default swap). They are completely different animals.

      This is why we are short and you are long.

      Best of luck to you.

      Care to touch base in a year?

      Let the markets decide!

      Matt
      View article »
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