A regulator will allow bond insurer MBIA to make a payment on surplus notes issued in 2008, the company said.
Last Tuesday MBIA announced that the New York State Department of Financial Services had not approved the payment owed by MBIA's subsidiary MBIA Insurance Corp. to holders of the notes. The payments were due Monday on 14% fixed-to-floating rate surplus notes that mature in 2033. As a result, MBIA submitted a form to the Securities and Exchange Commission announcing that it had not received approval of the payments within five business days of the payment due date, following terms of the Fiscal Agency Agreement.
On Monday morning MBIA announced that the department had approved payment on the notes.
Last week a source at MBIA said he did not know why the department had not yet approved payment on the notes. Due to the nature of the notes, a nonpayment on the notes would be considered a delay rather than a default, he said.
Last week the department declined to comment on the delay.
MBIA lost its triple-A ratings in the aftermath of the financial crisis due to problems with defaults on mortgage-backed securities it insured.