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.
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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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

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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References in periodicals archive ?
The 30 issuers whose insured bonds are expected to be affected by the AGLN upgrade have an aggregate net par insured amount of USD12.5bn.
A CDS is a type of insurance contract in which the seller of the CDS promises to pay the buyer of the contract in the event of default on the firm's insured bonds. So, a smaller spread means there is a lower perceived risk of default on the firm's bonds.
He noted that Wells Fargo Asset Management owns very little Puerto Rican debt, only some short-term insured bonds.
In some cases, managers have increased portfolio allocations to Puerto Rico to as much as 10.3%, albeit primarily in insured bonds and bonds backed by corporate obligors.
Assured, which insured bonds sold in 1999, 2005 and 2008, paid bondholders $4.2 million.
Similarly, insurance can increase liquidity for insured bonds by reducing the information risk faced by investors.
Demand for insured bonds will likely continue, since retail buyers comprise more than one-third of the market and have a strong preference for insured issues.
McCue then examines the effects of insurance on the yields of tax-exempt hospital bonds, and considers the relationships of underlying ratings with differences in the yields on insured bonds. Robert W.
(Circular letter 19, page 3) The Circular letter sets these "best practices" in seven areas; first, limitations on the writing of insurance by FGI's on pools of asset backed securities (ABS) that are comprised or include portions of other pools of ABS; second, credit protection for credit default swaps (CDS); third, limitations on the concentration of risk; fourth, extension of the requirement that at least 95% of an FGI's portfolio of insured bonds be investment grade; fifth, a clear statement of the continuing obligation of FGI's to manage risk prudently; sixth, higher levels of paid-in capital and paid-in surplus; seventh, increased requirements for capital and contingency reserves.
Mr Haste also revealed that the group has no exposure to credit insured bonds, US municipal bonds or US sub prime residential mortgage backed securities.
The group has no holdings in the troubled monoline insurers, nor has it got any exposure to investments like credit insured bonds or US municipal bonds.
11, S&P reported that after concluding that the current ACA enhanced issue ratings may not adequately reflect the underlying credit characteristics of the bonds, it had suspended the rating of those ACA insured bonds for which the issuer has not sought an S&P public underlying rating (SPUR).