Regarding the reduction or commutations of credit swaps, CMBS or otherwise, Joe Brown has stated during recent communiques, that MBIA has pretty much gotten rid of the risky policies.
The CMBS that threaten to send MBIA into rehabilitation, ie. Merrill Lynch CMBS were commuted through the recent settlement.
Collateralization of most credit swaps will be reduced by way of the upgrades received from Moody's and S&P ratings companies will add $924 million in pre-tax profit in Q2 2013.
I was not able to locate the current portion of longterm debt in the SEC 10-Q yet. I assume at the very least they will prepay that debt.
They have a court date on June 25, 2013 for formal approval of the distribution to MBIA and other Ally creditors. The allocation may decided on that same date.
Any ideas what MBIA will do with the $796 million settlement proceeds?
They used the Flagstar and BAC/Countrywide receipts to pay the intercompany loan to MBIA Inc from National Public Finance. They were sitting on nearly $400 million in MBIA Corp which they probably used to settle $350 million SocGen agreement.
With BAC line of credit availability of $500 million unencumbered, the need to sit the maintain 4 quarter average liquidity of nearly $400 million is not necessary. In the past I have seen companies lower their cash requirements to reduce any loans due within twelve months to decrease interest expense.
The cost of capital is so cheap now, that the notion of putting it in certificates of deposit is not practical.
AMM and MetalBULLETIN for information!
DXY has lost 4 points in as many weeks, now at 80.54.
Watch international and domestic ferrous scrap prices for possible appreciation.
DXY has fallen from 84.59 to 80.47. Watch ferrous scrap for US price exports and domestic increase too.
Detroit bond details National Public Finance Guarantee Corp
$100 million unsecured
$2,498 million total secured and unsecured
4% of the outstanding bonds insured by MBIA are unsecured and 96% are secured by revenue streams of the Muni-bond. $2.5 billion outstanding as of march 31, 2013.
MBIA is responsible for any shortfall in bond payments after revenues are applied.
Typically in a workout, payments would be extended in term. The average term of a Muni bond is 14.2 years. Secondly, interest rates would be lowered, all in an effort to shrink payment size.
Secured bonds have the distinct advantage of revenues generated must be applied to cover bond payments.
When establishing insurance on bonds, MBIA considers cashflow required to make payments plus a cushion above minimum payments due much like any lender would consider debt/income ratio calculations.
Data Source: MBIA press release effective March 31, 2013
Next week court is expected to approve Ally settlement, which is around 8000 times Detroit bond payments.
In addition, Detroit bonds are secured by collateral revenues stream. Any actual "out of pocket" payments are expected to be minimal. Thus, why the media blitz?
Someone is trying to capitalize on the Detroit issue!
Shakeout was really Berkowitz sellout!
It's over now. However, what's up with the media blitz on insignificant Detroit bond issue?
I smell paranoia...
I was thinking he could have sold calls at $18, then bought them back when they dropped from his selling. Afterall, most investors expected pps to rise to around $20 after settlements and, he knew the pps would be under pressure from his selling. Almost, as if he had a good idea?
I'm glad he's out already.
Dell or anyone,
could Berkowitz have benefited from options activity somehow, knowing that he was in the process of selling 30 million shares and the impact that could possibly have on the pps? Especially since he sold the shares between May 6- May 31?
Ferrous scrap jumped by $12/ton. Metalbulletin
By the way for seatlesleuth and, other fools unable to decipher good news applicable to Metalico, please consult a financial advisor.
I didn't expect much price movement but, the volume is anemic too.