The municipal bond insurance world will not be directly affected by the U.S. Treasury downgrade, according to municipal analysts. However, the likelihood of the bond insurers regaining their AAA status when the U.S. does not hold that title anymore is very slim.

Standard & Poor’s downgraded the short- and long-term U.S. debt rating to AA-plus, and subsequently assigned negative outlooks to AA-plus municipal bond insurer Assured Guaranty Corp. and Assured Guaranty Municipal Corp. because of their exposure to Treasuries.

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