Insured bond

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 ?
This $353 million default on an insured bond issue increased uncertainty in the municipal bond markets and caused insurers to tighten their bond quality underwriting standards for healthcare issues (Carpenter et al.
Interest savings can be determined by subtracting the average yield for a bond for a given credit rating and maturity from that of an insured bond of the same maturity.
The underlying probability of default on insured bond issues does not go away with the purchase of complete insurance coverage -- it simple shifts to the insurer who has its own default risk.
It has also foraged in the realm of double-A rated bonds, which are one rank below triple-A and produce lower premiums than the typical insured bond, which is in the range of single-A to triple-B.
I think that the premium is large for an insured bond,'' said William Fitzgerald, a portfolio manager at John Nuveen & Co.
Financial guaranty insurance provides investors with the assurance of timely payment of interest and principal in the event an insured bond defaults.
The outlook for the company remains very favorable as growing infrastructure needs continue to fuel strong growth in both municipal bond issuance and insured bond volume.
Sellers said, "In the 20-year history of the bond insurance industry, no monoline financial guaranty insurance company has been downgraded, no insured issue has been downgraded, and no insured bond investor has failed to receive an insured bond payment.
These funds include: the Nuveen California Tax-Free Bond Fund -- Special Bond and Insured Bond Portfolios; the Nuveen Tax-Free Bond Fund -- Massachusetts, New York and Ohio Portfolios; and the Nuveen Insured Tax-Free Bond Fund -- Massachusetts and New York Portfolios.
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.
The Index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds, and pre-refunded bonds.
The new policy offers issuers the ability to achieve higher foreign currency ratings from ratings agencies on the insured bonds offerings.