Friday, June 20, 2008

Mbia downgraded to A, worst case scenerio is here, I would not be surprised if they fall 50 percent or more friday

mbia has it worst case scenerio, after the bell today. It was downgraded to single A rating. Alot of investors dont know this but since they are downgraded to A, according to their 10q they will now have to post billions in collatorol, and pay out termination payments. Their 10 q doesnt list their termination payments, but their free collatorol, adjusting for their new capital base from 16.8 to 16 billion they will have 8.4 billion in free collatorol. and if you assume they have to pay out as much as they put in as collatorol, they will have less then 2.4 billion left. And with billions of payments left for the year, they are literally garanteeing bankruptcy. and with no way to raise new money, its garanteed. Note this is only from one section of their 10q. By going throught their 10q, their are more monetary concerns, such as their investments in ambac and other insurers, conduits, line of credits, bank notes,etc. I think tommmorow, mbia will fall hard, to low 2's or even lower. this is a death sentence for mbia, its all in the numbers.
http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=5923750-813-508368&type=sect&dcn=0001193125-08-110580

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