Insured bond

Insured bond

A municipal bond backed both by the credit of the municipal issuer and by commercial insurance policies.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
Insured bond ratings are based upon the credit quality of the insurer, not the bond issuer.
Insured bond sales have been 50 percent or more of the municipal bond market.
They ensured that heavily insured Bond actor Daniel Craig was neither shaken or stirred by the breathtaking chase scenes, which many critics have called the highlight of the new movie.
Hsueh and Liu's hypothesis is: "If the intrinsic default risk of an insured bond is still priced by investors, the null hypothesis that complete bond insurance acts as a valid signal in the municipal bond market is rejected".
"Why would you accept the same yield on a Puerto Rican insured bond as on Florida insured bond?
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., 2003).
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.
Information such as this has allayed any fears that may have existed in the minds of participants in the insured bond market.
Therefore, Moody's ratings on insured bond issues are used as a measure of their underlying default probability.
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.