Bond insurance grows through Q3

Assured Guaranty accounted for a total of $17.44 billion in 826 deals for a 60% market share in the first three quarters of 2021, up from the $15.05 billion in 734 deals for a 59.15% market share over the same period as the year before.

“Assured Guaranty continued to lead the municipal bond insurance industry with exceptionally strong production during the first nine months of the year,” said Robert Tucker, senior managing director, Investor Relations and Communications.

Assured guaranteed 61% of insured new-issue par sold, helping to propel bond insurance rate to 8.5% of municipal par issued, significantly above the 7.7% in nine months of 2020.

The $17.9 billion that Assured Guaranty insured in the primary market, which includes two transactions assigned corporate CUSIP numbers, was 19% higher than in the first nine months of 2020, and 88% more than in the first nine months of 2019. It was the highest insured par for the first nine months in a decade, according to Tucker.

Assured also increased the number of new issues it insured during the first nine months of 2021 to 828, up 13% year-over-year.

For the third quarter, bond insurance reached 8.6%, and Assured’s market share totaled 65% of primary-market insured par sold, as it guaranteed 270 transactions for a total of $6.7 billion in insured par, including the guaranty of $150 million of corporate-CUSIP bonds for a healthcare issuer.

“We continued to benefit from institutional investors’ preference for Assured Guaranty’s insurance on larger transactions,” Tucker said.

During the quarter, Assured insured $800 million of bonds for the Miami-Dade County Seaport Department across three issues; together, these issues total Assured’s largest combined transaction for one issuer in a single day in over 10 years.

These were three of the 17 bond issues the firm insured with $100 million or more in insured par, which brings its total year-to-date count of such deals to 38, one deal shy of its total deal count in this category for full-year 2020, Tucker said.

Tucker said Assured continued to add value on double-A credits during the third quarter, insuring $836 million of par on 27 deals with underlying ratings of AA by S&P and/or Aa by Moody’s, bringing year-to-date production in this category to about $3.1 billion with 83 deals.

Build America Mutual insured $11.58 billion, or a 40.1% market share, in 884 deals during the first nine months of 2021. That is up from the $10.44 billion, or a 41% market share, in 877 deals over the same period in 2020.

“BAM completed another strong quarter, maintaining the trends seen since the start of the COVID pandemic: Increased utilization of insurance across the market, driven by institutional investor interest in insuring larger, higher-rated transactions as part of their risk management and value preservation strategies,” said Michael Stanton, head of strategy and communications.

BAM insured four transactions of $100 million or more in the quarter, twice as many as in third-quarter in 2020, and each of them had a public rating in the double-A category from S&P Global or Moody’s Investors Service. Overall, more than 30% of BAM’s insured par for the quarter had underlying ratings in the double-A category, according to Stanton.

BAM insured new issues from 31 states, and the activity was “well-balanced across the core essential-purpose issuers in the market,” Stanton said.

K-12 school districts were the most active issuers of BAM-insured bonds, followed closely by cities and counties and utility systems.

The BAM GreenStar program remained the most active third-party verifier of municipal bonds that align with the green bond principles, with 49 issues worth $717 million, bringing year-to-date issuance to $1.5 billion.