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Municipal Bond Insurance

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Municipal bond insurance
An insurance policy which guarantees payment on municipal bonds in the event of default .
municipal bond insurance
A guarantee from a third party that principal and interest will be paid to a bondholder. Municipal bond insurance is written by private corporations for a fee paid by issuers hoping to obtain higher ratings and lower interest costs. Investors purchasing insured bonds or insured trusts obtain increased safety at the cost of lower yields.
Municipal Bond Insurance
A guarantee that the principal and coupon on a municipal bond will be paid at the appropriate times. Municipal bond insurance is usually structured in such a way that a private organization such as a bank is the actual issuer of the municipal bond, rather than the municipality itself. The bank does this in exchange for a fee. Municipal bond insurance grants a higher credit rating to the bond.


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