NEW YORK (Bloomberg) - MBIA Inc.'s five-level downgrade by Moody's Investors Service probably will force it to make $7.4 billion of payments and collateral postings.

MBIA has $15.2 billion of assets available to satisfy the requirements, the company said yesterday in a statement. That includes $4 billion in cash and short-term investments, $1 billion of unpledged collateral and $10.2 billion of other securities, MBIA said.

The company issued the statement in response to questions it received after Moody's yesterday reduced MBIA's insurance financial strength rating to A2 from Aaa.

The company's stock dropped 13 percent yesterday after the downgrade on concern that the Armonk, New York-based company would be forced to pledge assets.

In its report downgrading the debt, Moody's said MBIA faced payments and collateral calls triggered by the reduction. MBIA this month decided against giving $900 million to its insurance unit. While that contributed to the downgrade of the subsidiary, the money now puts the parent company in a stronger position, Moody's said yesterday.

"We have more than sufficient liquid assets to meet any additional requirements arising from any terminations or collateral posting requirements," MBIA said in a statement earlier this week in response to the Moody's downgrade.

The payments relate to the company's guaranteed investment contracts or GICs, backed by its insurance unit, and held by municipalities.

The contracts are used by cities, states and investment securities in lieu of bank accounts.

They require MBIA's holding company to post collateral against the contracts if its insurance unit's credit rating is cut as far as A2, according to company filings.

Credit-default swap sellers today demanded 38.5 percent upfront and five percent a year to protect MBIA's insurance unit from default for five years, according to broker Phoenix Partners Group in New York.

The upfront requirement rose from 31.5 percent on Friday.

Credit-default swaps, conceived to protect bondholders against default, pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements.

A rise indicates deterioration in the perception of credit quality.

A basis point on a credit-default swap contract protecting $10 million of debt from default for five years is equivalent to $1,000 a year.