MBIA Inc. yesterday unveiled a program to provide state and local governments with investment management services for municipal bond proceeds.

The venture, which the company last week confirmed was in the works, will be run through a new subsidiary, MBIA Investment Management Corp.

In a statement announcing the move, MBIA said the new subsidiary will provide municipal issuers with a "liquid, high-quality, investment alternative for bond proceeds."

The municipal investment agreements, which will offer a guaranteed interest rate, will be insured by MBIA's bond insurance subsidiary, Municipal Bond Investors Assurance Corp. Peggy D. Garfunkel, an MBIA vice president, will manage the new business line.

"Offering triple-A quality municipal investment agreements is part of MBIA's continuing commitment to increase the efficiency of public finance," said James E. Malling, MBIA's executive vice president of corporate marketing and new products. "This new product takes full advantage of MBIA's pre-eminent position in the municipal marketplace.

AMBAC Indemnity Corp., an MBIA rival, has been offering investment management services for about a year. Market sources say the success of the AMBAC unit, dubbed AMBAC Capital Management Inc., has prompted other insurers to step up to the plate. Financial Guaranty Insurance Co., for example, recently hired two veterans of the guaranteed investment contract business to help the company start up an operation of its own.

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