Investors who bet on bond insurer MBIA Insurance Corp. to default can’t collect following the collapse of a Lynn Tilton-assembled investment fund that MBIA guaranteed, according to a panel overseeing the credit-default-swap market, the Wall Street Journal reported. A committee within the International Swaps and Derivatives Association unanimously ruled on Tuesday that no failure-to-pay event occurred when one of the so-called Zohar funds Tilton created didn’t pay a scheduled $772 million debt maturity last month. MBIA was on the hook for that payment, and an unnamed market participant had asked ISDA to find that credit default swaps on the insurer had been triggered because $347 million of the Zohar debt was held by an MBIA affiliate. MBIA had acquired those notes under a side deal with another bond insurer, Assured Guaranty Corp., according to regulatory filings.
