Insured penetration steady despite lower volume

Assured Guaranty accounted for a total of $3.415 billion in 124 deals for a 59.5% market share in the first three months of 2023, compared to $4.950 billion in 179 deals for a 58.7% market share in 2022.

Assured was the frontrunner of "the municipal bond insurance market by a wide margin in the first quarter of 2023, while the industry's total insured par declined along with the decline in the total new-issue volume," said Robert Tucker, head of investor relations and communications at Assured.

Tucker believes "recent years' higher penetration rates reflect both investors' increased awareness of the benefits that bond insurance provides, especially during volatile economic conditions, and issuers' recognition of its cost-effectiveness."

The firm continues "to benefit from institutional investor demand for Assured Guaranty's insurance on larger transactions," he said.

During the quarter, Assured insured "eight transactions with $100 million or more in insured par, which totaled approximately $1.6 billion," he said. This included "a $365 million transaction for the Lower Colorado River Authority in Texas, a $325 million transaction for the H. Lee Moffitt Cancer Center Project in Florida, $320 million for Georgia Municipal Electric Authority consisting of two transactions, and a $135 million transaction for the Board of Education of the City of St. Louis in Missouri," Tucker said.

Among AA credits, Assured "insured 15 primary transactions for a total of $788 million of insured par during the quarter, indicating the breadth of our value proposition, including the potential to protect investors from the impact of a downgrade on the underlying obligor," he said.

Build America Mutual insured $2.320 billion, or a 40.5% market share, in 136 deals during the first quarter of 2023, compared to $3.479 billion, or a 41.3% market share, in 240 deals during the same period in 2022.

BAM has started the year off strong, according to Mike Stanton, head of strategy and communications at BAM.

The firm "saw continued strong demand for our guaranty, particularly on larger and higher-rated transactions, even as total new-issue volume was lower," he said.

Stanton said investors looked for "insured bonds with durable ratings and strong liquidity as they managed their portfolios to preserve value during the periods of elevated volatility and growing concerns about the potential for an economic recession that could impact municipal credit quality."

School districts' bond sales were strong in the first quarter of 2023, with Stanton saying "issuers moved quickly to start work on capital plans that were approved by voters in 2022." 

That included "more than $500 million of BAM-insured new-money bonds for Texas school districts — primarily during the period when the Texas Permanent School Fund reached its cap and was unable to guarantee new issues — and more than $750 million elsewhere across the nation," he said.