Confluence of Circumstances? LatAm Need for Credit Enhancement and the Return of MBIA

We may find that a couple of important market developments from the last several days may trigger some new sense of momentum in investor appetite for structured finance.

First was last week’s announcement of the long-awaited resolution of the BoA vs. MBIA case which found MBIA accepting a US$1.7Billion settlement from Bank of America in connection with their long running battle over legacy Countrywide Mortgage securitizations which had been insured by MBIA.  The bounce in MBIA’s stock price and the news later in the week that their credit rating was to be lifted to investment grade (BBB), has most market watchers believing that MBIA is back in the business of insuring bonds.

A second development took place at this week’s Latin American Securitization Conference in Miami where several speakers have indicated that in order to lure enough US-based investors into LatAm securitizations of mortgages and other assets, some level of credit enhancement will likely be required.  One would think that MBIA’s experience in the most active of these markets, combined with their “rediscovered capacities”, could make for a timely solution.

Only time will tell but a potentially useful example of need meeting capability at precisely the right time.

About markferraris
Managing Principal Orchard Street Partners LLC

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