The news on MBIA reveals a bit of revisionist reporting.
The Armonk based bond insurer posted a first quarter loss of $2.4 billion. The Financial Times says that that red ink was twice what analysts expected; the initial story at Bloomberg (hat tip Andrew Clavell) apparently made similar comments.
But the stock is up, and what does the Bloomberg headline now say? “MBIA Rises After Loss Is Narrower Than Some Estimates.” That piece now conforms to the new reality;
MBIA Inc., the ailing bond insurer, rose in New York Stock Exchange trading after saying it will pump $900 million into its insurance unit and reporting a first-quarter loss that was narrower than some analysts’ estimates.
MBIA, whose market value has slumped 87 percent in the past year, gained as much as 9.8 percent as the company reported a net loss of $2.4 billion and an operating loss of $3.01 a share. Bank of America analyst Tamara Kravec yesterday revised her estimate to a loss of $5.02 a share, from 99 cents…..
“Anything less than catastrophic is deemed to be good in this market,” Greg Peters, director of credit strategy at Morgan Stanley in New York said in an interview.
Further reporting from the Financial Times:
MBIA, the world’s largest bond insurer, on Monday reported a $2.4bn loss for the first quarter as it took billions of dollars of writedowns on derivatives contracts amid ongoing credit market deterioration.
The loss was more than twice analysts’ estimates, equating to $13.03 a share for the quarter, compared with profits of $198.6m, or $1.46 a share, for the first quarter of 2007.
MBIA was forced to reduce the value of securities it has insured through derivatives trades by $3.6bn in the first quarter as credit markets tumbled. Unlike traditional insurance on corporate or municipal bonds, the value of derivatives contracts called credit default swaps must be priced at the end of each quarter at current market value.
However, while MBIA acknowledged that the mark-to-market adjustment was “attention-getting”, it did not believe the writedown was representative of actual losses on the insured securities.