CORRECTED-TEXT-S&P cuts some MBIA Insurance surplus notes to 'C'

Tue Jan 15, 2013 6:20pm EST

(Corrects headline to reflect notes downgraded, not company)
    (The following statement was released by the rating agency)
    Jan 15 - Standard & Poor's Ratings Services said today that it lowered its
rating on MBIA Insurance Corp.'s 14% fixed-to-floating rate surplus notes due
2033 to 'C' from 'CCC'.

The downgrade of the surplus notes is a result of nonpayment of interest due 
on Jan. 15, 2013. The New York State Department of Financial Services (NYSDFS) 
has denied MBIA's request to make the scheduled interest payment. Under New 
York insurance law, any payment on the notes may be made only with the prior 
approval of the NYSDFS.

Our 'C' subordinated debt rating include issues on which cash coupon payments 
have been deferred, eliminated, or in some cases paid in kind, as permitted 
under the terms of the issue. We assign a 'C' rating for types of nonpayment 
that are permitted under the terms of the instrument to distinguish these more 
clearly from cases that constitute events of default, for which holders have 
specified remedies.

RELATED CRITERIA AND RESEARCH
     -- Credit FAQ: How The Expansion Of The 'C' Ratting Definition Affects 
Its Use For Hybrid Capital And Payment-In-Kind Instruments, Aug. 1, 2008
     -- Standard & Poor's Changes Rating Approach When Nonpayment Is 
Permitted, July 23, 2008

RATINGS LIST
MBIA Insurance Corp.
 Counterparty Credit Rating            B/Negative/--
 Financial Strength Rating             B/Negative/--

Rating Lowered                                  To        From
MBIA Insurance Corp.
 $1 bil var rate surplus nts due 01/15/2033     C         CCC

 (Caryn Trokie, New York Ratings Unit)
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