Insured bond

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Insured bond

A municipal bond backed both by the credit of the municipal issuer and by commercial insurance policies.

Insured Bond

A municipal bond on which payment is guaranteed by a bond insurance company, especially one with a high credit rating. An insured bond is doubly protected because it is guaranteed by both the revenues from the issuing municipality itself and by the bond insurer in case the issuer defaults. As such, an insured bond is very low risk, and therefore usually carries a lower coupon rate than an uninsured bond.

insured bond

A municipal debt obligation for which interest and principal are guaranteed by a private insurance company. Municipal issuers pay a premium to purchase the insurance in order to obtain a higher credit quality rating and a lower rate of interest on the debt.

Insured bond.

An insured bond is a municipal bond whose interest and principal payments are guaranteed by a triple-A rated bond insurer.

Insurance protects municipal bondholders against default by the issuer and protects bonds in case they're downgraded by ratings agencies, which can decrease market value.

Insured bonds generally offer a slightly lower rate of interest than uninsured bonds.

References in periodicals archive ?
While insured bonds accounted for more than half of the market in 2005, just 4 percent of muni issues were insured in the first half of 2012.
However, Haugh (2006) notes that the rise in insured bonds stems not from relaxing of credit quality standards by the bond insurers, but from the financial and operational improvement of hospitals that met the credit standards of the bond insurers.
The Index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds, and pre-refunded bonds.
Bond insurance is an insurance policy that guarantees the timely payment of scheduled principal and interest over the life of the insured bonds.
The new policy offers issuers the ability to achieve higher foreign currency ratings from ratings agencies on the insured bonds offerings.
One alternative involves placing the money into AAA-rated insured bonds producing tax-exempt interest of 7%, while the other alternative is the purchase of GNMA bonds producing taxable interest of 9.
The safest municipals are insured bonds, those backed by one of several AAA-rated insurance companies.
To avoid being a victim, look for insured bonds, backed by one of several AAA-rated insurance companies, such as Ambac Indemnity Corp.
For a pooling equilibrium to exist, therefore, investors must have the same assessment of credit quality for all insured bonds, since they observe the same insurance coverage for all insured debt.
Bondholders are also encouraged to send their contact information, together with the name of the issuer, CUSIP number, original par, series and other identifying information concerning the insured bonds, to CIFG at novationteam@cifg.
dollar denominated New York tax exempt bond market, including state and local general obligation bonds, revenue bonds, insured bonds, and pre-refunded bonds.
The research compared AAA/Aaa-rated insured bonds to AA/Aa bonds without insurance.