municipal bond insurance

Municipal bond insurance

An insurance policy which guarantees payment on municipal bonds in the event of default .
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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

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.
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.
References in periodicals archive ?
Municipal bond insurance is a good example of credit enhancement; using a bank letter of credit or state intercept program is another." JOE MYSAK, ENCYCLOPEDIA OF MUNICIPAL BONDS 42 (2012).
In addition to Build America Mutual Assurance Company, the first and only mutual municipal bond insurance company in the United States--which White Mountain kicked off through its subsidiary HG Global in 2012--it has acquired NSM Insurance HoldCo for $274 million and, indirectly, the British Fresh Insurance Service Group for nearly $50 million and DavidShield for $41.8 million.
AGM is a municipal bond insurance subsidiary of Assured Guaranty Ltd.
When Robert R Cochran and Sean McCarthy founded Build America Mutual in 2012, they were determined to follow a different course than the one that doomed many of their municipal bond insurance predecessors.
When Ambac and MBIA pioneered the municipal bond insurance business
She follows Ackman from day to day as over several years he tormented--as in Hugo's book police inspector Javert stayed on the tail of Jean Valjean--a giant quarry known as the Municipal Bond Insurance Association (MBIA).
Tax-induced market segmentation of the municipal bond market provides a rationale for municipal bond insurance. (2) The tax-induced local bias of municipal bond investors results in an allocation that is suboptimal from a risk-sharing perspective.
* We will continue efforts to create a new municipal bond insurance company that will improve cities' access to the credit markets.
JPMorgan Chase and Barclays have reported their decision not to oppose MBIA's plan to split its municipal bond insurance business from its structured finance operations in a filing with the New York State Supreme Court in Manhattan.
Richard, a journalist with Bloomberg News, recounts how Bill Ackman, co-founder of a hedge fund firm in New York, headed a campaign to warn rating companies, regulators, reporters, and investors that the bond insurer Municipal Bond Insurance Association was in danger of failing, then placed a bet against MBIA that would earn his investors billions of dollars if the company filed for bankruptcy.
Despite the win, the industry failed to gain a federal regulator, which it had hoped it would get in the wake of speculation last year from lawmakers that reinsurance and municipal bond insurance could break free of the burdens of 50-state oversight.
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