MBIA Inc., the parent of financial guarantor MBIA Insurance Corp., sold $1 billion of surplus notes Friday, in the company’s latest efforts to shore up capital reserves to meet the requirements needed to maintain its triple-A ratings.
The notes were sold with an initial five-year interest rate of 14%. After 2013, the interest rate changes to become a value of the three-month London Interbank Offering Rate plus 11.26%. The notes are subordinate to all other existing debt and are callable at par every five years. The transaction is scheduled to close on Wednesday.