Bond insurers see surge in business
The largest active municipal bond insurers wrapped $13.65 billion in the first half of 2020, an uptick from the $9.76 billion of deals done in the first six months of 2019.
The industry par amount was achieved in 962 deals, up from the 798 the year before. The insurance penetration rate inched up to 6.93% year-to-date, compared to from 5.67% in 2019. If the saturation rate stays above 6.36% at years end, it would be the highest since 2009 when the rate was sitting at 8.64%.
COVID-19 has and will continue to hamper state and local government revenues. It has already and will likely lead to more rating downgrades. The result is already changing how investors view credit and how to evaluate it in their investments. Bond insurance in its heyday, prior to the Financial Crisis of 2008 had half the municipal market insured. This new reality in 2020, dealing with the pandemic's effects on the markets, issuer credit quality, and investor sentiments may help the municipal bond insurance industry grow. Just recently, S&P Global Ratings released a report, that some experts and analysts predicted, COVID-19 has hit state and local municipalities hard but the bond insurers are making the most of the opportunity.