Top muni bond insurers of Q1 2020

Build America Mutual accounted for $2.52 billion of insured volume spanning 201 transactions, or 52.2% market share in Q1 2020, compared with $1.59 billion in 127 deals and 43.9% market share in Q1 2019.

“We saw strong investor demand for insured bonds throughout the quarter, even as market conditions shifted dramatically between January 1 and the end of March,” said Seán W McCarthy, CEO of Build America Mutual. “Insured new-issue volume was up 32% compared with the first quarter of 2019, while the market increased just 13%. That’s how we define a successful quarter.

He added that market share is less important than building investor demand for members’ insured bonds with BAM’s unconditional guaranty, durable rating, and services like our library of BAM Credit Profiles, which provide free access to standardized financial and demographic metrics for every transaction the mutual insurer insure and are updated annually, which is particularly valuable when economic conditions are changing as quickly as they are now.

“Through the first two months of the year, the market was driven by volume in taxable refundings and demand from nontraditional buyers who wanted absolute protection from municipal credit risk – BAM insured more than $500 million of taxable sales in this first quarter, versus less than $100 million a year ago,” he said. “Then, as the extent of the COVID-19 pandemic became clearer and credit spreads widened, there was more interest in secondary market bond insurance and insuring higher-grade transactions.”

BAM insured 12 primary-market transactions worth more than $350 million with underlying ratings in the double-A category, more than twice the double-A par it insured in Q1 2019. In addition, we verified the green bond status of five more transactions totaling $82 million, bringing the total volume of BAM GreenStar bonds sold over $900 million, according to McCarthy.

Assured Guaranty insured $2.31 billion in 160 deals for a 47.9% market share, versus $2.03 billion in 163 transactions or 56.1% market share in the same time period the year before. The figures are according to Refinitiv and include Assured's subsidiary Municipal Assurance Corp.

“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,” said Robert Tucker, senior managing director of communications and investor relations for Assured. “Throughout the quarter we remained disciplined in our credit selection and pricing, focusing on transactions that produce appropriate returns.”

Assured garnered approximately 50% of insured new issue volume during the first quarter of 2020, including $162 million of corporate-CUSIP taxable bonds and its 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, according to Tucker.

In total, AGO 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.