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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.



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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.
A downgrade of insurers' credit ratings would mean a slump in the value of every insured bond - prompting billions more dollars of red ink on the balance sheets of Wall Street institutions.
He's adjusting for a steepening yield curve and picking through insured bonds, many of which are selling at "irrational prices.
 
 
 
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