Bond insurance makes gains in 2021

Assured Guaranty accounted for a total of $23.1 billion — corporate CUSIPs included — in 1,078 deals, compared to $20.4 billion in 1,151 deals in 2020.

In 2021, Assured's corporate CUSIPs totaled $462 million, down from $708.4 million in 2020.

Robert Tucker, senior managing director, Investor Relations and Communications, noted that issuers using bond insurance has increased to the highest rate in more than 12 years at 8.7% in 2021. It was up from 7.6% during 2020 and 5.9% during 2019.

"An important trend in recent years has been that institutional investors have continued to recognize the value of our guaranty, enabling us to help launch more of the market’s largest transactions," Tucker said.

Assured provided $100 million or more of bond insurance for each of 48 large issues brought to market in 2021, up from 39 transactions in 2020 and 22 transactions in 2019.

In addition to the large issues guaranteed in 2021, Assured also provided bond insurance for hundreds of smaller issues, including 450 small enough to be bank-qualified, Tucker said.

"We delivered value for both large and small transactions, negotiated transactions, and competitive-bid transactions in many market segments and across a wide ratings spectrum," he said.

Build America Mutual insured $15.6 billion in 1,073 deals in 2021. That is compared to $15.2 billion in 1,119 deals in 2020.

BAM's activity was part of a market-wide increase in bond insurance use: last year, 8.7% of all new-issues were sold with insurance, the highest level since 2009.

For 2021, those transactions came from 39 states, versus 40 states in 2020.

Institutional investors, in particular, expanded their purchases of insured bonds to support broader portfolio management methods that optimize liquidity and rating stability. Moreover 20% of BAM's new-issue insured par had public underlying ratings in the double-A category from S&P Global Ratings or Moody's Investors Service, and BAM guaranteed 46 transactions with par of $50 million or more.

“It was another very strong year. We did $15.6 billion par in the primary market, which was a new high for us, and really reflected in the growth in the insurance market,” said Michael Stanton, head of strategy and communications. “Overall, it was an important step forward for the industry, that a lot of institutional investors in particular, who had become buyers of insured bonds immediately following the pandemic, continued to see the value, even as credit conditions normalized.”

The BAM GreenStar program remained the most active third-party verifier of municipal bonds that align with the green bond principles, bringing issuance to $1.7 billion in 2021 and more than $3.5 billion since the program’s launch in 2018.

"The biggest part of the BAM GreenStar program is sustainable water and wastewater investments. And these are projects that are being planned with a high level of sustainability and the issuers communicating that to the market by selling green bonds to finance," Stanton said. "That's becoming more common."