MBIA Inc., parent of the biggest insurer of Puerto Rico Electric Power Authority bonds, won a "buy" rating from MKM Partners on the expectation that PREPA will soon come to an agreement in which bond insurers will suffer minimal losses at worst.
MKM on Tuesday raised the shares to from "neutral," and set a target price of $12. MBIA rose 2.2% to $7.91 in morning trading.
"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," MKM analysts wrote. "We expect the two sides will ultimately be able to come to a consensual resolution prior to PREPA's next scheduled debt service payment in December."
MBIA's muni-only arm, National Public Finance Guarantee, wrapped about $1.4 billion of PREPA bonds as of June.
The analyst firm lowered its 2015 earnings estimate for MBIA to 50 cents a share from 51 cents. MKM also lowered its 2016 EPS estimates for MBIA to 40 cents a share from 42 cents a share.
MBIA on Monday announced Lois A. Scott, the former chief financial officer for the city of Chicago, was elected to its board of directors, where she will serve as a member of the audit committee.
MBIA will hold an investor call on Nov. 5 at 8 a.m., to discuss third quarter financial results for both MBIA and National.
