(Adds background on ratings moves)
NEW YORK, March 18 Standard & Poor's upgraded
bond insurer MBIA Inc on Tuesday, saying it expects the company
to gain market share and resume its prior role as a strong
player in guaranteeing U.S. municipal debt.
The agency raised MBIA's rating to A- from BBB and
upgraded National Public Finance Guarantee Corp, the company's
main unit for insuring municipal bonds, to AA- from A.
Both have a stable outlook, which S&P said reflects its
expectation that National "will gain market acceptance and
become a competitive financial guarantor."
Before the financial crisis, insured bonds made up about
half of all new debt issuance. By buying insurance,
municipalities could use the guaranteeing companies' top ratings
to push their borrowing costs down.
When the companies' ratings were cut on exposure to risky
mortgage-related debt, use of municipal bond insurance
plummeted. In 2008 the amount of insured debt fell 64 percent.
In 2013, the amount of insured U.S. municipal bonds shrank
to $12.08 billion, the smallest amount since the financial
crisis, according to Thomson Reuters data.
S&P also raised the rating on bond insurer Assured Guaranty
on Tuesday to AA from AA-, citing its strong competitive
position relative to its peers.
Assured was the only bond insurer left standing after the
crisis and remained the top municipal issuer in 2013 by backing
$7.38 billion of debt in 466 deals, Thomson Reuters data shows.
But its market share shrank after Build America Mutual
insured $4.44 billion of municipal bonds in 536 deals.
(Reporting By Lisa Lambert and Steven C. Johnson; Editing by