MBIA Discloses exposure to CDOs Squared
From Bloomberg: MBIA Bond Risk Soars on $8.1 Billion CDO Disclosure
MBIA Inc. tumbled … after the world’s biggest bond insurer revealed that it guarantees $8.1 billion of collateralized debt obligations repackaging other CDOs and securities linked to subprime mortgages. …MBIA posted a document on its Web site late yesterday showing it insured the so-called CDOs-squared, a potentially riskier form of security than what the company typically guarantees. Rising defaults on subprime mortgages packaged into securities have led to bond downgrades and threatened MBIA’s AAA guaranty rating.
“We are shocked management withheld this information for as long as it did,” Ken Zerbe, an analyst with Morgan Stanley in New York, wrote in a report yesterday. “MBIA simply did not disclose arguably the riskiest parts of its CDO portfolio to investors.”
