Benefits for Municipal Bond Investors
At Assured Guaranty, we carefully select bonds eligible for our bond insurance, and we back our judgment with our own capital. As a result, investors enjoy benefits that go beyond the basic default protection of our guaranties. Here are some of the key reasons to purchase bonds insured by AGM, MAC or AGC.
Timely payments: If the municipal issuer fails to make a scheduled payment on time for any reason, the guarantor is obligated to make prompt payment, thereby enabling the investor to receive consistent cash flow. Bear in mind that, while municipal bond defaults are rare, they occur more frequently in periods of economic stress (e.g., Detroit, MI; Jefferson County, AL; Harrisburg, PA; Stockton, CA).
Professional credit underwriting and negotiated terms: There are tens of thousands of U.S. municipal issuers, some quite small, and a wide variety of bond structures. Moreover, municipal financial reporting is not as timely or transparent as that of publicly traded companies. Assured Guaranty has the resources to evaluate the unique risks of each issue and can often negotiate stronger terms and conditions for the bonds we insure.
Surveillance and remediation: Assured Guaranty's trained surveillance specialists track every issuer for the life of its insured bonds. In many cases, the guarantor can help resolve potential problems before they become serious.
Enhanced market liquidity: AGM, MAC and AGC together have insurance in force on 8.5% of the $3.7 trillion of municipal bonds outstanding.* Although insurance does not guarantee a particular market value, distressed issuers' bonds insured by highly rated guarantors have historically held their trading value better than comparable uninsured issues.
For additional help deciding whether to purchase insured municipal bonds, see our FAQ for the retail market “Municipal Bond Insurance: The Basics” at thinkAssuredGuaranty.com.
* Par outstanding as of December 31, 2014.