(Reuters) – MBIA Inc shares declined after Bank of America Corp offered to buy some of its bonds, which could thwart the insurer's effort to change their terms and avoid what it has called a possible default.
MBIA shares fell 19 percent, or $1.60, to $6.81 on Tuesday. Bank of America shares fell 0.6 percent to $9.33.
MBIA last week proposed changing some bond terms to eliminate the risk that it might be considered in default if a troubled insurance unit were put into rehabilitation or liquidation by the New York State Department of Financial Services.
The company at the time said if there were such a default it would have "insufficient liquidity" to make good on the notes, and "would likely immediately pursue other alternatives" including a possible "company bankruptcy."
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