The amount of municipal bonds wrapped by insurance surged 29% in 2024, as demand continued to grow among market participants who relied on the coverage to build investor confidence, increase market liquidity and improve credit ratings.
In total, municipal bond insurers wrapped $41.09 billion of debt in 2024, an increase from the $35.38 billion insured in 2023, according to LSEG data. The two main insurers, Assured Guaranty Municipal Corp. and Build America Mutual, accounted for $37.67 billion of deals in 2024, compared with $31.845 billion in 2023. The LSEG data includes other types of guarantees such as state-backed funds.
The industry par amount was achieved in 1,681 deals versus 1,399 deals in 2022.
Assured Guaranty accounted for a total of $21.083 billion in 791 deals, accounting for a 56% market share among the top two insurers, versus $16.516 billion in 645 deals for a 61.3% market share in 2023, according to LSEG data.
Build America Mutual insured $16.586 billion in 893 deals, or 44% of the market for the two main insurers. That compares with $12.33 billion, or a 38.7% market share, in 752 deals in 2023, according to LSEG data.
Both insurers saw year-over-year growth. Bond insurance for Assured and BAM rose 8% and 34.5%, respectively, as both firms said 2024 was a banner year for bond insurance.
The industry's annual penetration rate at 8.3% of par issued, remaining at or above 8% for the fourth consecutive year, said Robert Tucker, senior managing director at Assured.
For Assured, the increase in bond insurance year-over-year was helped by several large deals, including $1.1 billion of par for the Brightline Florida Passenger Rail Project issue and a total of $1.6 billion of par in two issues – for the John F. Kennedy International Airport New Terminal One project, he said.
As the largest private-activity bond issuance and first investment-grade debt for American high-speed rail, the Brightline transaction, which won Bond Buyers Deal of the Year, restructured $4.5 billion of debt across three liens, achieving a new standard for multi-modal transit funding. The New Terminal One project is a public-private partnership between the airport's operator, the Port Authority of New York and New Jersey, and a consortium including Ferrovial, JLC Infrastructure, Ullico, and Carlyle. The deal was cited as Bond Buyer's Northeast Deal of the Year.
The two deals were among the six that Assured Guaranty insured for more than $500 million of par, as the firm "helped launch several of the market's largest and most high-profile transactions," he said. Assured wrapped 48 deals with $100 million or more in insured par, Tucker added.
"We believe this indicates that institutional investors increasingly place greater value on our guarantee," he said.
Also, Assured saw an increase in the use of insurance among AA credits. Year-over-year, the firm "insured 17% more such policies for 33% more par, reflecting a total of 95 policies (21 of which were during the fourth quarter) and approximately $4.4 billion of insured par," Tucker said.
BAM had its strongest year in 2024, as "institutional investor demand drove issuers and underwriters to use insurance more frequently on larger transactions — BAM insured 65 sales with par of $50 million or more, up more than 30% from 2023 — and we continued to serve smaller and medium-sized issuers with nearly 900 total insured new-issues," said Mike Stanton, head of strategy and communications at BAM.
Notable transactions included $391 million of water and wastewater bonds for Atlanta, $372 million for the Springfield, Illinois, electric system and $281 million for Florida State University, he said.
Strong demand for guarantees led to growth from both firms.
"We benefited from greater overall issuance and strong investor demand for our insurance, including from institutional investors on some very large infrastructure transactions," Tucker said.
The firm continues to provide "meaningful financing cost savings for issuers and additional protection for investors in a time of geopolitical uncertainty and increasingly unpredictable environmental conditions," he said.
BAM benefited from "strong demand for insurance from a wide range of investors on a diverse mix of credits, which is driving very strong results," Stanton said. Institutional investor interest continues to drive insurance utilization on larger and higher-rated deals, he said.
This strength has continued into 2025 as market participants continue to turn to bond insurance.
BAM already has new-money transactions on tap from "issuers who executed successful bond referendums last Fall and significant transactions for a wide range of revenue-bond issuers, including the Lower Colorado River Authority in Texas, the Kansas City Schools, and the South Jersey Transportation Authority," Stanton said.
