Municipal Bond Forum

How strong is MBIA/National?

Is MBIA in good financial shape and are they able to withstand a complete default from Puerto Rico? I’d like to know before I buy bonds.
J.G., Florida

James A. Klotz responds:

National Public Finance Guarantee Corp. is the division of MBIA that insures municipal bonds. National recently requested that the rating agencies withdraw their ratings for the company, as they no longer wished to pay for a rating.

Before S&P withdrew its rating, it affirmed the A rating that was being withdrawn. Moody's still maintains its A3 rating for National.

Although National will not be writing new business, it is expected to retain its claims-paying ability.

Before buying these securities, we suggest you contact one of our municipal bond specialists to ensure you receive the necessary information regarding them.