MBIA Inc., seeking to avert a crippling reduction of its AAA credit rating, will receive as much as $1 billion from the private-equity firm Warburg Pincus LLC.

The world's biggest bond insurer will sell $500 million of common stock to Warburg Pincus. The private-equity firm will also backstop a shareholder rights offering of up to $500 million next year, MBIA said Monday. MBIA, of Armonk, N.Y., said it faces "significantly" higher losses from a slump in the value of securities it guarantees.

The added capital may help ward off a cut in MBIA's top credit rating, which is under scrutiny by Moody's Investors Service Inc., Fitch Inc., and Standard & Poor's Corp. MBIA's AAA ranking stands behind $652 billion of state, municipal, and asset-backed bonds, and losing the AAA credit rating would threaten its guaranteeing of debt, its main source of revenue.

Rob Haines, an analyst at CreditSights Inc. in New York, said the investment from Warburg Pincus "staves off the potential for a rating downgrade."

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