Issuing new bonds with MAC municipal bond insurance benefits issuers in a number of ways.
Reduced cost of funds: Bond insurance is designed to save issuers money. For appropriate credits, municipal bonds issued with insurance trade at lower yields than they would if not insured. The bond insurance premium absorbs some of the spread; the issuer keeps the rest.
Market access: Especially in times of widespread budget uncertainty, smaller or less well-known issuers may find it difficult to launch bond issues at any price. Municipal bond insurance can often overcome that hurdle, providing not only financial backing but promoting improved perception of the underlying credit.
An experienced negotiating partner: We bring broad experience insuring both tax-exempt and taxable municipal bond issues, allowing us to adjust bond insurance terms and conditions to meet not only our own needs but also those of issuers and the market.
Single point of contact: Our surveillance department’s ability to spot early signs of credit trouble can help issuers as well as investors. If we see a potential problem, we will work constructively with the issuer to head it off, and we may have more flexibility than a bond trustee to waive covenants or take other steps to set a transaction back on the right path. From the issuer’s point of view, there is only one “investor” to deal with for the life of the transaction.
For information on obtaining MAC insurance for a new issue, visit our Insuring New Issues page.