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MBIA Could Face Derivatives Writedowns in First Quarter

MBIA said Friday that it could face write-downs in the first quarter on its credit derivative positions, after further market weakness in the first two months of the quarter.

The largest bond insurer in the world said in a regulatory filing that the ultimate size of losses would depend on market developments.

MBIA recorded $3.7 billion of losses from the change in credit derivatives' value in 2007, which resulted in net losses for the year of $1.9 billion. MBIA has recently raised more then $2.5 billion of capital from investors to help offset those losses and has taken other measures to boost capital, such as eliminating its dividend.

But if additional write-downs were high enough, MBIA might have to raise more capital to preserve its top debt ratings.

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