Standard & Poor's Ratings Services said today that it raised its financial strength rating on MBIA Insurance Corp. (MBIA Corp.) to 'B' from 'CCC'. The outlook is stable. At the same time, we raised our financial strength rating on National Public Finance Guarantee Corp. (National) to 'BBB' from 'BB' and the stand-alone credit profile to 'a' from 'bb'. We placed our rating on National on CreditWatch Positive. We also placed our 'B-' long-term counterparty credit rating on MBIA Inc. on CreditWatch Positive.
"Our rating action on MBIA Corp. reflects our view that potential stress on the company's liquidity position has lessened as a result of the announced settlement with Bank of America (BofA), and that the company is unlikely to come under regulatory control during the next 12 months," said Standard & Poor's credit analyst David Veno. The settlement included the commutation of all of the MBIA Corp. policies with BofA insuring a notional amount of approximately $6.1 billion of credit default swaps referencing commercial mortgage-backed securities transactions that experienced significant deterioration in recent months and a $500 million three-year secured revolving credit agreement with BofA. The rating also reflects our view of the company's small capital base relative to the risk of its insured portfolio; poor operating performance, which we expect to continue; and lack of competitive advantage to improve its financial position in the next 12 months. The rating reflects the company's run-off status and our belief that this corporate profile is unlikely to change in the near term.