After a recent credit-rating downgrade, MBIA Inc. (MBI) must come up with $2.9 billion in possible termination payments, as well as an additional $4.5 billion in collateral to stabilize guaranteed investment contracts (GICs).

Many investment contracts have minimum collateral requirements that go into effect in the event of a credit-rating downgrade. MBIA has roughly $15 billion in assets to meet the collateral call.

“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 last week after the downgrade.

MBIA shares took another hit on the news, as the stock dropped 11% with a 66-cent decline to trade at $4.93 at noon in New York. The stock had already shed 13% on Friday, after Moody’s Investor Services, the credit-rating arm of parent Moody’s Corp. (MCO) downgraded MBIA Insurance from “Aaa” to “A2? late last week.

“MBIA is leveraged through their own rating and that can make a downgrade very harsh,” Matt Fabian, a senior analyst with Municipal Market Advisors, told Bloomberg News. “It’s very hard for an outsider to piece together the impact of these downgrades.”

One of the main reasons for the downgrade, which follows similar credit-rating reductions of MBIA from Standard & Poor’s and Fitch Ratings Inc., is the large number of credit default swaps (CDSs) on complex collateralized debt obligations (CDOs) that MBIA insures.

As the subprime mortgage crisis has unfurled, the underlying assets of the CDOs have become exponentially more risky, leading to almost $400 billion in write-downs throughout the global financial industry so far.

The bond insurers, including MBIA as well as rivals Ambac Financial Group Inc. (ABK) and FGIC, are in desperate talks with banks to tear up contracts that amount to $125 billion in mortgage-backed debt, The Financial Times reported. The so-called monocline firms are hoping to commute the contracts through a one-time payment that will release the insurers from honoring the full-value of the assets, should they default.

“If firms and their counterparties can get across the finishing line in their commutation negotiations, a shadow of uncertainty would be lifted from the monoline sector, with the prospect of better rating stability,” Matthew Elderfield, chief executive of the Bermuda Monetary Authority, which regulates a number of bond insurers, told The Financial Times.