LOS ANGELES -- Build America Mutual Assurance Company announced Monday that it is offering its guaranty for municipal bonds trading in the secondary market or held in a portfolio by investors, in addition to insuring new municipal issues.
BAM was founded in July and is rated AA with a stable outlook by Standard & Poor’s. The company, the first mutual municipal bond insurer, insured its first bond issue, $10 million of York Suburban School District, Penn., general obligation bonds, at the end of September.
As of Monday, the company will offer insurance to institutional investors in most of the country, though it is not yet offered in all states as the company hasn’t completed the licensing process in every state.
BAM says it will maintain and frequently update a list of municipal bond issues approved for insurance in the secondary market. Quotes are available by calling the company’s secondary market desk at 212-235-2550.
“We believe the use of our guaranty will not only add value to municipal bonds traded in the secondary market, but will also provide increased transparency and liquidity based on the detailed information we provide on all of our insured issues,” said Robert P. Cochran, managing director and chairman of BAM.
The company posts obligor disclosure briefs on every BAM-insured issue on its website, which aim to help broker-dealers in meeting disclosure rules for secondary market issues.
BAM also announced that it has hired Hans G. Hanf as the head of municipal markets to manage its Competitive Bid and Secondary Market Desk.
“We are looking forward to working with Hans, who adds significant experience to our organization,” Cochran said in a statement. “He will make a strong contribution toward our goal of providing our customers with the highest level of service as we expand our business.”
Hanf joins BAM from Chapdelaine & Co., where he was manager of municipal business development. Prior to that, he was vice president of the Bond Market Association, directing its regional dealer program. He will report directly to Seán McCarthy, managing director and chief executive officer of BAM.
“I am very excited about this opportunity,” Hanf said. “I believe BAM’s mutual structure, which is based on shared purpose values with its municipal members, offers the market important advantages.”
The company said that its new guaranty will increase the liquidity of BAM-insured issues and offer additional benefits for issuers.
Investors and traders can contract directly with BAM for secondary market insurance, and issuers of bonds insured by BAM in the secondary market will be entitled to benefits that primary BAM issuers have. These benefits include certain voting rights and the right to receive future dividends, when declared by the board of directors and subject to regulatory approval.