U.S. Public Finance

Assured Guaranty is the leading provider of municipal bond insurance in the United States.

Our municipal credit enhancement products include:

  • Municipal bond insurance policies covering principal and interest, for both new issues and those already trading in the secondary market
  • Surety policies that take the place of cash-funded reserves in municipal bond transactions

We guarantee a wide range of municipal bond types supported either by tax revenues or revenues from essential public projects or services. We insure both tax-exempt and taxable municipal bonds.

While we have three platforms – AGM, insuring only public finance transactions; MAC, insuring only U.S. municipal bonds in select categories; and AGC, a diversified provider – we are one team, applying a uniform underwriting standard and dedicated to the highest level of customer service. In addition to our large municipal bond insurance department in our New York headquarters, we maintain a fully staffed western regional office in San Francisco.

Q2 2020 Results and Impact of COVID-19 

We believe that in the market environment caused by the COVID-19 the pandemic has refocused investors’ attention on credit considerations, price volatility and market liquidity, and is leading to greater demand for our insurance. Second quarter industry insurance penetration demonstrated this increased demand, with an insured rate of 8.8% of total par issued being the highest quarterly level since 2009. During May, issuers used bond insurance on more than 10% of municipal par issued, only the third time in the last 10 years that monthly penetration has reached double digits.

Assured Guaranty continued to operate effectively remotely and saw outstanding production during the second quarter of 2020, increasing our primary-market par insured to 63%. In aggregate, for the primary and secondary markets, Assured Guaranty’s par insured totaled $9 billion for the first half of 2020, including $6.3 billion for the second quarter, up 42% and 58%, respectively, year over year.  Although yields had returned to historical lows by quarter-end, we continued fielding a high volume of requests for insurance bids in both the primary and secondary markets.

Compared with the second quarter of last year, Assured Guaranty’s primary-market production was up 58% to $5.8 billion, surpassing the 51% increase in the total insured market, and up 22% to 317 new issues in transaction count. In the case of AA credits (defined as those credits that have a “AA” category rating from S&P or Moody’s on an uninsured basis), Assured Guaranty insured a total of $1.045 billion in the second quarter alone, one of the highest quarterly insured par amounts we have insured in this category. Additionally, we continued to be the insurer of choice for larger transactions, insuring 11 transactions of over $100 million in insured par during the quarter, the largest of which was a $385 million school district transaction for the Dormitory Authority of the State of New York, rated Aa3/AA- by Moody’s and Fitch, respectively.

Significantly stronger demand for our secondary market insurance resulted in our insuring $533 million of secondary market par during the second quarter of 2020, compared with $230 million for the first quarter of the year and $327 million for the second quarter of 2020. 

In its July 16, 2020 report on Assured Guaranty, S&P Global Ratings (S&P) recognized the increased demand for Assured Guaranty’s product since the spread of COVID-19, writing: “[w]ider credit spreads and investor uncertainty should continue to provide Assured [Guaranty] with primary and secondary underwriting opportunities in the U.S. public finance market.” It also observed that, as a result of a “flight to quality and the associated spread widening, Assured [Guaranty] has experienced strong demand in the secondary market as the economics of bond insurance are appealing to institutional investors as a tool for risk mitigation.”

In the same report, S&P said that the COVID-19 sensitivity stress test it had run “indicated that the incremental increase in loss assumptions would still result in a capital adequacy assessment [for Assured Guaranty] of excellent.”

Q1 2020 Results

Assured Guaranty garnered approximately 50% of insured new issue volume during the first quarter of 2020, including $162 million of corporate-CUSIP taxable bonds. Our total primary market par volume was up 22% from the first quarter of 2019 at approximately $2.5 billion of new issues sold across a broad spectrum of bond sectors, transaction sizes and deal structures. In total, Assured Guaranty insured $2.7 billion of par across the primary and secondary markets for the first quarter of 2020. Beyond  those public market transactions, Assured Guaranty also insured $76 million in private placements during the quarter. In addition to the $2.5 billion of primary market par we insured during the quarter, we were mandated on over $800 million of additional par where the pricing was postponed due to market conditions. Throughout the quarter, we remained disciplined in our credit selection and pricing, focusing on transactions that produce appropriate returns.

2019 Results

In 2019, Assured Guaranty continued to lead the industry in par insured, guaranteeing 60% of the insured new issue municipal volume sold during the year.  In total for the year, we guaranteed 840 tax-exempt and taxable new issues, with an aggregate insured par of $14.7 billion.* On each of 22 different transactions, we insured $100 million or more of par.  Included in the $14.7 billion total is $4.4 billion of insured par obtained through competitive bids, representing 64% of that market.  $1.5 billion in par of our new issue volume included underlying transactions rated in the AA category by S&P Global Ratings or Moody’s Investors Service.  Additionally, Assured Guaranty executed $1.3 billion of insured par on the secondary markets.

*Insured volume, number of transactions and market share information in this paragraph was calculated by Assured Guaranty based on information supplied by SDC Refinitiv, and includes a $700 million taxable health care transaction that may be excluded from third-party municipal data bases because it has a corporate CUSIP.

Forward-Looking Statements
Any forward-looking statements made on this page reflect Assured Guaranty’s current views with respect to future events and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. Assured Guaranty’s forward-looking statements, including but not limited to those related to the market for its credit protection products and to the financial health and resilience of the obligors underlying its insured portfolio, could be affected by the development, course and duration of the COVID-19 pandemic and the governmental and private actions taken in response (including governmental responses that could reduce demand for the Company’s credit protection products), and the global consequences of the pandemic and such actions, and other factors identified in Assured Guaranty’s filings with the Securities and Exchange Commission, which are available on its website, and other risks and uncertainties that have not been identified at this time. Readers are cautioned not to place undue reliance on these forward-looking statements, which are made as of July 17, 2020. Assured Guaranty does not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Contact Information

  • William J. Hogan
  • Senior Managing Director
  • 212 408 6006
  • Email
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  • Christopher Chafizadeh
  • Senior Managing Director
  • 212 339 0832
  • 914 420 6530
  • Email

     

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