MBIA Bond Risk Soars On $8.1 Billion CDO Disclosure (Shannon D. Harrington and Christine Richard)

   MBIA, Ambac Financial Group Inc., and other insurers are being reviewed by credit-rating companies on concern they don't have enough capital to cover potential losses stemming from mounting downgrades of the securities they guarantee. If the bond insurers are cut, it would likely mean that more than $2 trillion of securities they back would lose their AAA ratings.

   MBIA fell $7.20, or 27 percent, to $19.82 at 1:47 p.m. in New York Stock Exchange composite trading.

   The company posted a document on its Web site late yesterday showing it insured $8.1 billion of so-called CDOs-squared, which repackage other CDOs and securities linked to subprime mortgages. Rising delinquencies on subprime loans contributed to downgrades on 2,007 CDOs last month alone, according to Morgan Stanley.

   MBIA's ``eleventh-hour'' disclosure ``ignites concerns all over again about the prospect for future losses,'' Kathleen Shanley, an analyst at bond research firm Gimme Credit in Chicago, wrote in a report. She said outside investors didn't know about the CDOs-squared, which she called the riskiest type of CDO. 

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