Bond insurance grows; Assured, BAM expand

Bond insurance continued its upward trajectory in the first quarter of 2024, leading the two top municipal bond insurers to expand.

Municipal bond insurance grew 24.4% in the first quarter of the 2024 year-over-year.

The top two municipal bond insurers wrapped $7.132 billion in the first quarter of 2024, up from the $5.735 billion of deals in the first quarter of 2023, according to LSEG data.

The industry par amount was achieved in 318 deals versus 260 deals in Q1 2023.

Insurance penetration for the first quarter of the year fell to 7.2%.

Assured Guaranty accounted for a total of $3.782 billion in 152 deals for a 53% market share in Q1 2024, compared to $3.415 billion in 124 deals for a 59.5% market share in Q1 2023.

The $3.782 billion of new-issue par Assured insured during Q1 2024 was up 10.7% year-over-year.

The firm continues to benefit from “institutional investor demand for Assured Guaranty’s insurance on larger transactions,” said Robert Tucker, senior managing director of investor relations and communications at Assured.

Assured insured “seven transactions with $100 million or more in insured par, totaling approximately $1.4 billion, including the two transactions with the largest insured par in the bond insurance industry,” he said.

The firm also continues to add value on double-A credits, insuring $605 million of par on 23 deals in the first quarter, according to Tucker.

This growth continues into the second quarter as the firm is expected to participate in the Florida Development Finance Corp.’s $2 billion deal.

Meanwhile, Build America Mutual insured $3.350 billion, or a 47% market share, in 166 deals during the first quarter of the year, up from $2.320 billion, or a 40.5% market share, in 136 deals in the first quarter of last year.

BAM’s par amount surged 44.4% year-over-year, faster than the pace of the overall market, said Mike Stanton, head of strategy and communications at BAM.

“It was a very successful start to the year,” he noted, as the firm saw “more than a billion dollars from seven large transactions with par of $100 million or more that drew strong institutional investor demand.”

Overall, BAM insured sales from 31 states, up from 20 in the first quarter of 2024, and 85% of the insured par was for new-money investments in several sectors, including K-12 and higher education, airports, toll roads, and water and sewer utilities, and general government projects, he said.

“BAM’s flexibility and engagement with the market helped unlock opportunities for partial insurance on larger deals to attract specific buyers,” Stanton said, as seen in the $186 million 2048 maturity within the New York Metropolitan Transportation Authority’s $1.273 billion sale in March.

Assured and BAM’s growth has led both firms to expand.

Assured recently promoted two employees, Marc Livolsi and Evan Boulukos, and hired a former Citi employee, Paige Litten, to expand its new-issue and secondary market business.

Both Livolsi and Boulukoshave more than 20 years of experience in the muni market, and during their short tenure at Assured, they have already contributed to the firm’s growth, said Chris Chafizadeh, senior managing director and co-head of Public Finance, at the time of their promotion.

The duo has “long, successful track records,” and the firm’s “public finance business will benefit from their long and deep involvement in the municipal bond market as we further build our market leadership position,” he said.

Litten, who joined the public finance, will play a role in “originating and optimizing deal execution across all sectors and states,” Livolsi said.

Additionally, the firm hired Melissa Gribble, who has nearly 40 years of experience under her belt, to expand the firm’s reach within the Australian market, where she will focus on “sourcing new opportunities for Assured Guaranty’s financial guarantee business in the infrastructure, utilities and structured finance markets,” according to a press release.

Meanwhile, BAM recently brought on John Miller, a veteran banker and advisor, as a senior advisor focused on growing the firm’s use of bond insurance in the primary market for large infrastructure and public power projects. 

“John’s experience financing major projects is the perfect background to work with underwriters and municipal advisors and help structure transactions to access that demand and minimize the cost of financing essential infrastructure,” said BAM CEO Seán W. McCarthy in a statement.

The firm has expanded its outreach to “make sure we can be responsive to more issuers and their deal teams,” Stanton said, as insurance has grown in relevance to a wider range of transactions.

Along with Miller’s hiring, this has included opening a regional office in Austin and bringing on Martin Arrick, BAM’s head of healthcare, he said.