What is "Assured Guaranty" in the context of municipal finance?

"Assured Guaranty" refers to a company that provides municipal bond insurance, which is critical in the context of municipal finance. This type of insurance enhances the credit quality of municipal bonds, making them more attractive to investors. By insuring the bond, the company guarantees that the bondholder will receive timely interest payments and the return of principal upon maturity, even if the municipality defaults.

This insurance helps municipalities borrow at lower interest rates since the presence of a reputable insurer reduces the perceived risk for investors. Consequently, municipalities can fund projects more cost-effectively. Insurers like Assured Guaranty play a significant role in the municipal finance ecosystem by supporting the overall stability and accessibility of capital markets for public entities.