MBIA Surges on Bank of America Settlement Speculation
Shares of MBIA (NYSE: MBI) surged on heavy volume in the last two hours of trade on Friday, following speculation that the company may reach a settlement in its lawsuit with Bank of America (NYSE: BAC).
The bond insurer is being sued in a New York state court for allegedly interfering with the bank's offer to buy MBIA bonds.
According to Reuters, Bank of America said it had purchased $136 million of senior notes in that tender and issued a default notice over the attempt to change terms. The lawsuit claims that MBIA illegally interfered with its tender offer and asked for the consent solicitation and amendment to be declared invalid. Bank of America is also seeking punitive and other damages in the lawsuit.
A judge in the case issued a mixed ruling on Friday afternoon regarding BofA's request to redact from public record certain documents. The decision, however, is not pertinent to the case and other reports indicated nothing new has changed in the lawsuit. Nevertheless, speculation about a possible settlement triggered a nearly 12 percent rally in the stock which closed at $9.09.
© 2015 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.