Monoline bond insurers that have hit rock bottom are positioned for a rebound that could see them wrapping up to 30% of new issue supply in some ratings groups, Citigroup Global Markets said.

Smaller and medium-sized deals with single-A and BBB ratings will be best suited for insurers as the industry heats up due to competition between municipal-only guarantors Build America Mutual and Assured Guaranty’s Municipal Assurance Corp, Citi said in a report on Thursday. Higher yields on municipals, market volatility and stronger demand from retail investors could prop the industry up from its current all-time low, Citi said.

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