Municipal Bond Guarantees
Municipal authorities, special districts, and public agencies: Bond guarantees can save millions in interest costs while improving your credit profile. Access AAA-rated credit enhancement from Treasury-certified financial guarantee insurers.
Which describes your situation best?
Who Benefits from Municipal Bond Guarantees?
Understanding which public entities gain the most from credit enhancement
Municipal Governments
Cities, counties, and towns with below-AAA ratings can significantly reduce borrowing costs through bond guarantees, especially for general obligation bonds.
- General obligation bonds
- Infrastructure projects
- Public facilities financing
- Equipment purchases
Typical savings: $500K - $5M+ over bond life
Special Districts
School districts, water districts, and other special purpose entities often have limited credit history, making bond guarantees particularly valuable.
- School district bonds
- Water and sewer districts
- Transportation authorities
- Hospital districts
Additional benefit: First-time market access
Public Authorities
Housing authorities, development agencies, and other public entities financing specific projects or revenue-generating assets.
- Housing finance agencies
- Economic development corporations
- Port authorities
- Public power utilities
Key advantage: Revenue bond enhancement
How Municipal Bond Guarantees Work
The mechanics of credit enhancement for municipal bonds
Insurance Wrapper
Financial guarantee insurer wraps your bonds with an insurance policy guaranteeing timely payment of principal and interest
Market Response
Investors price bonds based on insurer's AAA rating, not underlying municipal credit, reducing borrowing costs
Risk Transfer
Insurer assumes credit risk in exchange for premium, providing investors with additional security layer
Application Process
Step-by-step guide to obtaining bond guarantee credit enhancement
Initial Consultation
Assessment and planning
- • Bond sizing and structure
- • Credit profile review
- • Savings analysis
- • Market timing discussion
Credit Application
Documentation submission
- • Financial statements (3-5 yrs)
- • Budget and forecasts
- • Legal documents
- • Bond indenture draft
Due Diligence
Insurer review process
- • Credit analysis
- • Management meetings
- • Site visits (if applicable)
- • Legal review
Commitment
Final terms and approval
- • Premium quote
- • Commitment letter
- • Policy terms
- • Closing coordination
Bond Sale
Market execution
- • Policy delivery
- • Bond pricing
- • Sale execution
- • Closing procedures
Timeline
Municipal bond guarantee applications typically require 4-8 weeks from submission to commitment, depending on transaction complexity and insurer workload.
Savings Calculator
Estimate interest savings from bond guarantee credit enhancement
Small Issues
Medium Issues
Large Issues
Import Equipment Considerations
Municipal projects often require customs bonds for imported equipment and materials. When your infrastructure projects include foreign-sourced components, customs general bonds ensure smooth import operations and project delivery timelines.
Frequently Asked Questions
Common questions about municipal bond guarantees
What is a municipal bond guarantee?
A municipal bond guarantee is credit enhancement provided by a financial guarantee insurer that wraps municipal bonds with an insurance policy, guaranteeing payment of principal and interest. This improves credit rating and reduces borrowing costs for municipal issuers.
How much can municipal bond guarantees save?
Municipal bond guarantees typically save 25-150 basis points in interest costs, which can amount to millions in savings over the life of a bond issue. For a $50 million, 20-year bond, savings can range from $2.5 million to $15 million.
Who can use municipal bond guarantees?
Cities, counties, towns, school districts, water districts, transportation authorities, hospital districts, housing authorities, and other public entities can use municipal bond guarantees to enhance their credit and reduce borrowing costs.
How long does the application process take?
Municipal bond guarantee applications typically require 4-8 weeks from submission to commitment, depending on transaction complexity, insurer workload, and the completeness of documentation provided.
What credit ratings benefit most from guarantees?
Municipalities with A or BBB ratings typically see the greatest benefit from bond guarantees, as the enhancement to AAA can produce significant interest savings. Even AA-rated issuers often find value in guarantees during volatile markets.
Related Financial Guarantee Bonds
Explore other specialized financial guarantee solutions
Educational Resources
Learn more about municipal bond guarantees and public finance
Ready to Reduce Your Municipal Borrowing Costs?
Municipal bond guarantees can save millions in interest costs while providing access to broader investor markets. Start with a no-obligation savings analysis for your next bond issue.
No obligation consultation. Our municipal finance specialists will analyze your specific situation and provide detailed savings projections for your bond issue.