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With rising volatility and uncertainty, and the continued want for effectivity inside the municipal market, bond insurance coverage serves as an answer to the market’s most difficult points, as insured quantity continues to develop year-over-year.
Municipal bond insurance coverage quantity grew 17.7% within the first three quarters of 2025 year-over-year, in response to LSEG information. That outpaced the 11.8% progress of
The highest two municipal bond insurers wrapped over $34.162 billion in Q1-Q3 2025, the info reveals.
The trade par quantity was achieved in 1,339 offers versus 1,225 offers a 12 months in the past.
Bond insurance coverage begins to “make numerous sense” as a monetary instrument, Paige Litten, a director at Assured Warranty, mentioned Monday at The Bond Purchaser’s California Public Finance convention in San Diego.
An increasing number of patrons will not be simply taking a look at insurance coverage as a credit score enhancement, but additionally as a financing instrument to draw patrons with totally different views, she mentioned.
“We have seen all patrons take part in offers with insurance coverage throughout many various sectors, many various ranking classes, and throughout the credit score spectrum,” Litten mentioned.
Insurance coverage may also tackle the market’s fragmented nature, mentioned Jeff MacDonald, head of fastened earnings securities at Fiduciary Belief.
“We’re speaking a couple of market with over 50,000 particular person issuers, and the benchmark alone, which has sure {qualifications}, and it offers with over 60,000 particular person bonds,” he mentioned.
Moreover, for a “lot of smaller issuers the place buyers might not have the power to do the credit score work for, or they don’t seem to be accustomed to the credit score, and it could be harder to develop that investor base if you happen to’re bringing a deal to market,” MacDonald mentioned.
That is the place insurance coverage is a “worth add,” particularly for a few of these smaller issuers which can be much less adopted and fewer well-known, he famous.
Insurance coverage can be a “nice diversification” instrument on the $1 billion to $2 billion mega offers coming to market, guaranteeing that “we’re capturing all of the patrons which can be on the market,” mentioned Jaclyn Mischler, co-head of municipal syndicate at Morgan Stanley.
And generally, insurance coverage can imply the distinction between a deal getting completed or not getting completed within the taxable house under $100 million, mentioned Ed Tishelman, senior managing director at Siebert Williams Shank.
With portfolio managers managing a number of asset courses, together with municipalities, and infrequently on smaller offers, it offers their firm the chance to return in in your deal, he mentioned.
Bond insurance coverage is even rising amongst some market gamers.
Hedge funds, as an example, are shopping for bonds for energetic insurance coverage, even within the higher-rated classes, searching for that liquidity facet, Litten mentioned.
Each Assured Warranty and Construct America Mutual skilled progress throughout the first three quarters of the 12 months, with the previous seeing a 29% enhance and the latter ticking up 2.4%.
Assured Warranty wrapped $21.459 billion in 703 offers for a 62.8% insured market share within the first three quarters of 2025, up from $16.633 billion in 563 offers for a 57.3% market share within the first 9 months of 2024.
The agency’s secondary market bond insurance coverage exercise elevated throughout this era, leading to $1.5 billion of par, greater than 3 times the year-over-year quantity, mentioned Robert Tucker, senior managing director of investor relations and communications at Assured.
“We consider that many secondary market buyers buy our insurance coverage to handle the potential influence of financial circumstances and market volatility on their investments,” he mentioned.
Throughout the first three quarters, Assured Warranty “assured 42 transactions using at the very least $100 million of its insurance coverage, for $11.3 billion of insured par offered,” he mentioned.
Within the third quarter particularly, Assured insured 15 transactions of $100 million or extra, totaling $4.5 billion in par, together with $422 million for Orlando, Florida; $600 million for the New York Transportation Improvement Corp.’s New Terminal One at JFK Airport; and $237 million for Park Creek Metropolitan District in Colorado, Tucker mentioned.
“Some buyers want to have the extra safety of Assured Warranty insurance coverage on their bonds with AA underlying rankings, as this may also help defend the market worth of the bonds within the occasion of surprising underlying credit score volatility,” he mentioned.
Assured Warranty is rated AA by S&P World Rankings and AA-plus by KBRA.
Throughout the first 9 months of 2025, Assured issued 132 insurance policies on $5.8 billion of double-A par, 23 of which had been in Q3 for a complete of $801 million, Tucker mentioned.
BAM insured $12.703 billion, or a 37.2% insured market share, in 637 offers throughout Q1-Q3 2025, in comparison with $12.4 billion, or a 42.7% market share, in 662 offers within the first 9 months of final 12 months. The third quarter was particularly sturdy, with a 32% achieve year-over-year.
“We noticed rising demand for BAM’s warranty from buyers who had been seeking to diversify their credit score publicity and handle the elevated potential for rankings volatility as Federal finances constraints influence some municipal issuer budgets,” mentioned Mike Stanton, head of technique and communications at BAM.
That meant “extra partial insurance coverage on bigger transactions and by first-time issuers of BAM-insured bonds: A couple of third of BAM’s Q3 transactions had been from new member-issuers, and greater than 1 / 4 of the par insured carried public underlying rankings within the AA class from S&P or Moody’s,” he mentioned.
BAM insurance coverage carries a AA ranking and secure outlook from S&P World Rankings.
Most of BAM’s new-issue quantity got here from new-money investments, with the general public energy sector being significantly energetic, Stanton mentioned.
“Issuers superior capital plans to enhance their transmission and technology capability, aiming to stay forward of rising demand from information facilities and electrical automobiles,” he mentioned.
Notable offers included $375 million for the Decrease Colorado River Authority, $198 million for the Southern California Public Energy Authority, and $108 million for the Lengthy Island Energy Authority, in response to Stanton.
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