Moody’s moves MBIA outlook to negative

Moody’s Investors Service said it changed its outlook for MBIA Inc., National Public Finance Guarantee Corp., and MBIA Insurance Corp. to negative from stable and affirmed its ratings, including the Ba3 senior unsecured debt rating, the C (hyb) surplus notes rating, the C (hyb) preferred stock rating and the C (hyb) preferred stock non-cumulative rating of MBIA Insurance.

The negative outlook reflects MBIA's recent announcement that the New York Department of Financial Services has approved a $550 million extraordinary dividend to be paid to MBIA from National.

National also paid an about $97 million ordinary dividend to MBIA in November.

About $409 million of cash will be paid to MBIA shareholders through an $8 per share special dividend, the company said. The rest will be held at the holding company to boost liquidity.

“In Moody's opinion, this significant extraction of capital from National reduces the firm's capital adequacy and highlights the weak alignment of interests between shareholders and policyholders. MBIA expects to make additional extraordinary dividend requests in the future, which could further weaken the firm's risk-adjusted capital adequacy over time,” the agency said in a press release.

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