Debt

12 Months Ended

Dec. 31, 2023

Debt Disclosure [Abstract]

Debt

Note 10: Debt

Long-Term Debt

The Company’s long-term debt consists of notes and debentures including accrued interest as follows:

	As of December 31,
In millions	2023			2022
7.000% Debentures due 2025	$	45		$	45
7.150% Debentures due 2027		96			96
6.625% Debentures due 2028		112			112
5.700% Senior Notes due 2034 (1)		21			21
Surplus Notes due 2033 (2)		940			940
Accrued interest		1,378			1,222
Debt issuance costs		(7	)		(8	)
Total	$	2,585		$	2,428

(1) - Callable anytime at the greater of par or the present value of the remaining scheduled payments of principal and interest.

(2) - Contractual interest rate is based on three month LIBOR plus 11.26% until June 30, 2023. In connection with the Company's transition from LIBOR, effective July 1, 2023, the interest rate is based on three-month term Secured Overnight Financing Rate ("SOFR") plus 11.52161% at each future reset date.

During 2022, MBIA Corp. purchased $24 million principal amount of MBIA Inc. 6.625% Debentures due 2028, $4 million principal amount of MBIA Inc. 7.150% Debentures due 2027 and $1 million principal amount of MBIA Inc. 7.000% Debentures due 2025. As of December 31, 2023, National owned $308 million principal amount of the 5.700% Senior Notes due 2034 and $10 million principal amount of MBIA Inc. 7.000% Debentures due 2025; MBIA Corp. owned $29 million principal amount of MBIA Inc. 6.625% Debentures due 2028, $5 million principal amount of MBIA Inc. 7.150% Debentures due 2027 and $1 million principal amount of MBIA Inc. 7.000% Debentures due 2025; and MBIA Inc., through its corporate segment, owned $13 million of MBIA Corp. surplus notes. These amounts are eliminated in the Company’s consolidated financial statements.

Interest and principal payments on the surplus notes are subject to prior approval by the NYSDFS. From the January 15, 2013 interest payment to the present, MBIA Corp.’s requests for approval of the note interest payments have not been approved by the NYSDFS. MBIA Corp. provides notice to the Fiscal Agent when it will not make a scheduled interest payment. The deferred interest payment will become due on the first business day on or after which MBIA Corp. obtains approval from the NYSDFS to make such payment. No interest will accrue on the deferred interest. The surplus notes were callable at par at the option of MBIA Corp. on the fifth anniversary of the date of issuance, and are callable at par on January 15, 2028 and on any other date at par plus a make-whole amount, subject to prior approval by the Superintendent and other restrictions. The cash received from the issuance of surplus notes was used for general business purposes and the deferred debt issuance costs are being amortized over the term of the surplus notes.

The aggregate maturities of principal payments of long-term debt obligations in each of the next five years ending December 31, and thereafter, are as follows:

MBIA Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 10: Debt (continued)

In millions	2024		2025		2026		2027		2028		Thereafter		Total
Corporate debt	$	—	$	45	$	—	$	96	$	112	$	21	$	274
Surplus Notes due 2033		—		—		—		—		—		940		940
Total debt obligations due	$	—	$	45	$	—	$	96	$	112	$	961	$	1,214

Investment Agreements

Certain investment agreements provide for early termination, including, in some cases, with make-whole payments, upon certain contingent events including the bankruptcy of MBIA Inc. or the commencement of an insolvency proceeding with respect to MBIA Corp. Upon the occurrence of certain contractually agreed-upon events, some of these funds may be withdrawn by the investor prior to their contractual maturity dates. All of the investment agreements have been collateralized in accordance with the contractual terms.

Investment agreements have been issued with fixed interest rates in U.S. dollars. As of December 31, 2023 and 2022, the annual interest rates on these agreements ranged from 4.78% to 6.88% and the weighted average interest rates were 6.06% and 6.09%, respectively. Expected principal payments due under these investment agreements in each of the next five years ending December 31, and thereafter, based upon contractual maturity dates, are as follows:

	Principal
In millions	Amount
Maturity date:
2024	$	23
2025		35
2026		59
2027		29
2028		29
Thereafter (through 2037)		63
Total expected principal payments (1)	$	238
Less discount and other adjustments (2)		17
Total	$	221

(1)- Amounts reflect principal due at maturity for investment agreements issued at a discount.

(2)- Discount is net of carrying amount adjustment of $2 million and accrued interest adjustment of $4 million.

Medium-Term Notes

MTNs have been issued with fixed or floating interest rates in U.S. dollars or Euros. Floating rates on Euro-denominated MTNs are floored at 0% when the actual floating rates become negative. Certain MTNs are measured at fair value in accordance with the accounting guidance in Accounting Standards Codification Topic 815, “Derivatives and Hedging”. As of December 31, 2023, the interest rates of the MTNs ranged from 2.21% to 5.90% and the weighted average interest rate was 4.76%. As of December 31, 2022, the interest rates of the MTNs ranged from 2.06% to 5.90% and the weighted average interest rate was 4.65%. Expected principal payments due under MTN obligations based on their contractual maturity dates are as follows:

	Principal
In millions	Amount
Maturity date:
2024	$	34
2025		32
2026		—
2027		2
2028		30
Thereafter (through 2035)		572
Total expected principal payments (1)	$	670
Less discount and other adjustments (2)		173
Total	$	497

(1)- Amounts reflect principal due at maturity for notes issued at a discount.

(2)- Discount is net of carrying amount and market value adjustments of $12 million and accrued interest adjustment of $3 million.

MBIA Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 10: Debt (continued)

Variable Interest Entity Debt

VIE notes elected to be recorded at fair value are debt instruments that were issued primarily in U.S. dollars by VIEs consolidated within the Company’s international and structured finance insurance segment. These VIE notes consist of debt instruments issued by issuer-sponsored consolidated VIEs collateralized by assets held by those consolidated VIEs. Holders of insured obligations of issuer-sponsored VIEs do not have recourse to the general assets of the Company. In the event of non-payment of an obligation issued by a consolidated VIE, the Company is obligated to pay principal and interest, when due, on MBIA-insured obligations only.

As of December 31, 2023 and 2022, the aggregate unpaid contractual principal of consolidated VIE notes was $328 million and $780 million, respectively. As of December 31, 2023 and 2022, the unpaid contractual principal of MBIA-insured consolidated VIE notes was $96 million and $189 million, respectively, which excludes liabilities where the Company’s insured exposure has been fully offset by way of loss remediation transactions. Refer to “Note 7: Fair Value of Financial Instruments” for information about the fair values of consolidated VIE notes.

The following table provides the expected principal payments due under MBIA-insured consolidated VIE notes as of December 31, 2023, which are net of principal payments where the Company’s insured exposure has been fully offset by way of loss remediation transactions. For RMBS consolidated VIEs, principal amounts are based on the expected maturity dates and for all other consolidated VIEs, principal amounts are based on the contractual maturity dates.

	Insured
	Principal
In millions	Amount
Maturity date:
2024	$	43
2025		9
2026		8
2027		4
2028		5
Thereafter (through 2038)		27
Total	$	96

Following the creation of a litigation trust established to liquidate the Zohar Collateral pursuant to a plan of liquidation that became effective in August of 2022, certain lenders agreed to make term loans to fund the trust that the Company consolidates as a VIE, in an aggregate amount not to exceed the commitment amount. Loans made to the trust bear interest at 18% per annum, mature on August 2, 2027, and can be prepaid at any time in part or in whole, in some cases subject to certain fees. Accrued interest due on the interest payment date is capitalized and added to the outstanding principal in lieu of cash payment. Loans are secured by recoveries from the litigation claims transferred into the trust. Proceeds received from the settlement of the litigation claims are first applied to the outstanding loan balances and, to the extent of any excess, distributed to the trust beneficiaries or used to permanently reduce the unused commitment amounts. During 2022, the third party loan funded at a principal amount of $7 million was partially repaid and as of December 31, 2023 and 2022 the outstanding balance was $3 million and $2 million, respectively. The outstanding unfunded commitment available to the litigation trust as of December 31, 2023 was $9 million.