Patrick McGee

Insurance holding company MBIA Inc. reported a net loss to shareholders of $1.5 billion in the first quarter, as a $2.2 billion loss on insured credit derivatives exceeded earnings from all other sources. That compares with first-quarter 2009 net income of $696.7 million.

Assured Guaranty Ltd. late Monday announced its first-quarter operating income was $89.6 million, a 41% increase from the same period one year ago. However, the company acknowledged that new business production for its core product — municipal bond insurance — declined substantially from a year ago.

Reacting to client demand for Build America Bonds, Barrington, Ill.-based Arbor Research and Trading Inc. has launched a municipal group led by veterans from Citi.

The municipal market ended a volatile week with yields wider by two basis points on Friday.

Long-term municipal bond yields fell across the board this week, according to the Bond Buyer’s weekly yield indexes. The strengthening did not keep pace with Treasury yields, however, which fell much more sharply.

After a stable morning, the municipal market gained two basis points in the late afternoon as the Dow Jones industrial average suddenly dropped almost 1,000 points, or 9.2% and closed down 347.80, or 3.20%.

The municipal market improved by another basis point yesterday as negative headlines from Europe initiated a flight to quality.

New issuance in the municipal market was firmer yesterday as high-grade bonds improved by one or two basis points. That turned away some in the secondary market, where trading was light to moderate.

The tax-exempt market remained firm yesterday even as Treasuries weakened on the front end of the curve.

The New York Supreme Court late Thursday denied Bank of America Corp. and Countrywide Financial Corp.’s motion to dismiss MBIA Insurance Corp.’s claims of fraud by Countrywide.

Municipal issuance suffered a setback in April as both tax-exempt and taxable volume declined but year-to-date volume remained modestly higher.

By setting up municipal sales desks in foreign offices 10 years ago, top-ranked underwriter Citi had a head start in selling taxable munis to foreign investors, which turned out to be a major boon once Build America Bonds were introduced last year.

Municipal market veteran Faye Boatright has joined BondFactor Co. in New York, sources confirmed Friday. If the firm sounds unfamiliar, that’s because the name recently changed from BondModel, the bond guarantor start-up.

JPMorgan, the nation’s third largest municipal underwriter, and Charles Schwab, one of the world’s largest financial services companies, have joined forces to meet what they see as increasing demand from retail investors in the fixed-income market.

Fifteen months after Assured Guaranty Corp. agreed to reinsure $13 billion of CIFG Assurance NA’s public finance portfolio, the process of transitioning from one insurer to the other is not completed, meaning insured bondholders could be at risk.

Municipal market dynamics are so favorable right now that investors involved in tender-option bond programs can create better revenue streams compared to what they received before the financial crisis, but at half the risk or less.

MBIA Insurance Corp. could run out of capital by 2014 if deterioration of its portfolio continues at average market trends, according to an independent analysis by CreditSights published Friday.

The first-quarter rankings for bond insurers present a mixed story for Assured Guaranty Ltd., the unrivaled titan in the market. Through its two insurer subsidiaries, the company commanded 100% of the sector where $6.5 billion in debt was insured in the first quarter, according to Thomson Reuters.

Bond insurer Syncora Guarantee Inc. announced late Monday it has completed the comprehensive restructuring it began in July 2009, but contrary to earlier hopes the company is far from ready to recommence paying claims.

Five of the six complaints bond insurer MBIA Insurance Corp. filed in April 2009 against Merrill Lynch were dismissed by the New York Supreme Court late Friday.