Debt

12 Months Ended

Dec. 31, 2021

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	2021		2020
7.000% Debentures due 2025	$	46	$	46
7.150% Debentures due 2027		99		100
6.625% Debentures due 2028		136		141
5.700% Senior Notes due 2034(1)		21		21
Surplus Notes due 2033(2)		940		940
Accrued interest		1,098		991
Debt issuance costs		(9)		(10)
Total	$	2,331	$	2,229

(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%.

During 2021, MBIA Corp. purchased $5 million principal amount of MBIA Inc. 6.625% Debentures due 2028 and $1 million principal amount of MBIA Inc. 7.150% Debentures due 2027. During 2020, the Company redeemed the remaining $115 million principal amount of its 6.400% Senior Notes due 2022 at a cost of 100% of par value plus accrued interest. Additionally, as of December 31, 2021, 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; 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, 2023 and every fifth anniversary thereafter and are callable 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:

In millions	2022		2023		2024		2025		2026		Thereafter		Total
Corporate debt	$	—	$	—	$	—	$	46	$	—	$	256	$	302
Surplus Notes due 2033		—		—		—		—		—		940		940
Total debt obligations due	$	—	$	—	$	—	$	46	$	—	$	1,196	$	1,242

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, 2021 and 2020, the annual interest rates on these agreements ranged from 4.78% to 6.88% and the weighted average interest rates were 5.89% and 5.86%, 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: 

In millions	Principal Amount
Maturity date:
2022	$	3
2023		19
2024		23
2025		35
2026		96
Thereafter (through 2037)		128
Total expected principal payments(1)	$	304
Less discount and other adjustments(2)		30
Total	$	274

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

(2)—Discount is net of carrying amount adjustment of $3 million and accrued interest adjustment of $5 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, 2021, the interest rates of the MTNs ranged from 0% to 5.90% and the weighted average interest rate was 3.62%. As of December 31, 2020, the interest rates of the MTNs ranged from 0% to 6.00% and the weighted average interest rate was 2.97%. Expected principal payments due under MTN obligations based on their contractual maturity dates are as follows:

In millions	Principal Amount
Maturity date:
2022	$	52
2023		12
2024		54
2025		57
2026		—
Thereafter (through 2035)		606
Total expected principal payments(1)	$	781
Less discount and other adjustments(2)		191
Total	$	590

(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 $29 million and accrued interest adjustment of $3 million.

Variable Interest Entity Notes

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.

In July of 2019, MBIA Insurance Corporation consummated the Refinanced Facility. In connection with the Refinanced Facility, original notes issued by MZ Funding in January of 2017 were redeemed or amended, as applicable, and the Senior Lenders purchased new senior notes issued by MZ Funding (the “Insured Senior Notes”) with an aggregate principal amount of $278 million. In addition, MBIA Inc. received amended subordinated notes issued by MZ Funding (and together with the Insured Senior Notes, the “New MZ Funding Notes”) with an aggregate principal amount of $54 million. The New MZ Funding Notes were scheduled to mature on January 20, 2022 and bore interest at 12% per annum. The Refinanced Facility is secured by a first priority security interest in all of MBIA Corp.’s right, title and interest in the recovery of its claims from the Zohar Collateral. If funds received from MBIA Corp. under the Refinanced Facility were insufficient to pay interest on interest payment dates, MZ Funding may elect to pay interest in kind, which increases the outstanding principal amount. As of December 31, 2020, the outstanding amount of the Insured Senior Notes was $273 million. During 2021, MBIA Corp. repaid in full the outstanding amount of the Insured Senior Notes. Subsequent to December 31, 2021, MBIA Inc. agreed to extend the maturity date of the subordinated notes of MZ Funding, which had an aggregate principal amount of $68 million, to April 20, 2022 at a reduced rate of 7% per annum. The subordinated notes of MZ Funding are eliminated in the Company’s consolidated financial statements. 

As of December 31, 2021 and 2020, the aggregate unpaid contractual principal of consolidated VIE notes was $922 million and $1.4 billion, respectively. As of December 31, 2021 and 2020, the unpaid contractual principal of MBIA-insured consolidated VIE notes was $350 million and $722 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. As of December 31, 2020, the only VIE note not accounted for at fair value was the MZ Funding note with a contractual interest rate of 12%.

The following table provides the expected principal payments due under MBIA-insured consolidated VIE notes as of December 31, 2021, 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.

In millions	Insured Principal Amount
Maturity date:
2022	$	26
2023		21
2024		20
2025		18
2026		10
Thereafter (through 2038)		255
Total	$	350