MGIC Investment Corp., the nation's largest mortgage insurer, said it would defer by 10 years an interest payment on $390 million worth of subordinated debentures, igniting a steep selloff in its stock during the morning of March 12.

Originally, MGIC was scheduled to make an interest payment on April 1. The convertible debentures carry a yield of 9%. In a new public filing MGIC said, "During this 10-year deferral period interest on the debentures will not be due and payable but will continue to accrue and compound semi-annually to the extent permitted by applicable law at an annual rate of 9%."

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