The bond insurance sector has demonstrated remarkable resilience in 2024, as evidenced by a 26.8% increase in the amount of debt it wrapped compared to the previous year. Municipal bond insurers enveloped approximately $28.921 billion from January to September 2024, a significant rise from the $22.814 billion recorded during the same period the previous year, according to data sourced from LSEG. This growth is not only reflected in sheer numbers but also in the increased activity within the market, with par amounts achieved across 1,217 deals, up from 995 deals the year prior. These figures signify a robust demand for bond insurance, with both institutional investors and issuers recognizing the value of protection against default risk.
The performance of leading bond insurers, Assured Guaranty and Build America Mutual (BAM), underscores how the sector has capitalized on heightened interest. Assured Guaranty alone accounted for $16.599 billion insured in 561 deals, which represented a market share of 57.4%. This is a slight decline from the previous year’s 62.6% share, reflecting competitive pressures within the market, especially as BAM experienced significant growth with a total of $12.322 billion insured in 656 deals, climbing from a 37.4% market share last year. BAM’s remarkable increase of 44.5% underscores that emerging players can gain traction alongside established ones in a climate of favorable market conditions.
Among the noteworthy transactions, Assured insured several high-profile projects, indicating a strategic focus on large-scale infrastructure needs. This included a $1.1 billion insurance policy for the Brightline Florida passenger rail project, which reflects the growing demand for sustainable and efficient transportation solutions. Additionally, substantial amounts insured for projects like the New Terminal One at John F. Kennedy Airport further illustrate investor confidence in pivotal infrastructure developments. The fact that Assured Guaranty has achieved its second-highest primary market par insured in a decade hints at an evolving landscape where investors are increasingly looking for protective measures in larger transactions.
Build America Mutual’s positioned growth must be highlighted, as it showcases the ability of newer firms to penetrate and succeed within traditional markets. BAM’s total primary market par amount has already surpassed that of its entire performance in 2023, a clear indication of its upward trajectory. Moreover, the increase in deals with insured amounts of $100 million or greater—from 18 deals last year to 23 this year—signals an uptick in institutional investor engagement, particularly on larger transactions. The firm’s innovative approach, such as utilizing partial insurance on significant sales, demonstrates responsive strategies aimed at satisfying specific market demands.
A stand-out feature of 2024’s bond insurance market is the pronounced interest from institutional investors, which has driven both Assured and BAM’s growth. This demand can be attributed to a combination of rising interest rates and geopolitical uncertainties that make bond insurance an appealing choice for risk mitigation. With a focus on high-rated credits, especially those rated in the double-A range or higher, both firms provided critical financial safety nets for investors looking to navigate a bumpy economic landscape. Ultimately, this trend signals the potential for continued robustness in the bond insurance realm.
As 2024 progresses, the trajectory of demand for bond insurance appears to be strongly positioned, reflecting broader trends in the municipal market. Insurers like Assured Guaranty and BAM have shown that collaborative efforts and adaptation to market shifts can yield favorable outcomes amidst fluctuating economic conditions. With both firms highlighting meaningful financing cost savings for issuers and protective measures for investors, it is evident that the bond insurance sector will remain a critical component of the municipal finance landscape. Continued monitoring of investor sentiment, infrastructure developments, and regulatory shifts will be essential in understanding how this promising trend evolves in the future.