MBIA credit rating fear

Shares in MBIA, the world's biggest bond insurer, tumbled after reporting its largest-ever quarterly loss and admitting it's considering how to raise new capital.

Late yesterday the company reported a loss of $2.3bn for the last three months of 2007. MBIA, which together with other bond insurers guarantees $2.4 trillion of debt, is scrambling to keep hold of its top credit rating. The loss of the rating would threaten the ratings of a further $652bn of securities.

Analysts reckon that fears that MBIA and Ambac will lose their ratings contributed to the volatilty in stock markets last week.

The high-profile banking analyst who triggered the resignation of Citigroup chairman Charles "Chuck" Prince is predicting investment banks will need to take further write-downs of $40bn (£20bn) to $70bn as a result of the current crisis in the bond insurance market.

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Update: MBIA shares rise; bond insurer highlights liquidity

Also note the Ripple Impact of $534 Billion Debt Downgrade