Bond Insurance Usage Rises Nearly 5% in Q1

Why It Matters

Higher bond‑insurance activity lowers borrowing costs and boosts liquidity for municipal issuers, while the shifting market share signals a competitive reshuffle that could affect pricing and underwriting standards across the muni market.

Key Takeaways

• Bond insurance volume grew 4.9% YoY to $7.704 billion in Q1 2026
• Assured Guaranty’s market share fell to 53.1% from 63.3% YoY
• BAM’s insured par jumped 34% to $3.61 billion, gaining market share
• Education projects accounted for 30% of BAM’s insured par
• New‑money issuances represented 77% of BAM’s insured par

Pulse Analysis

The municipal bond‑insurance market posted a near‑5% increase in the first quarter, driven by robust issuance pipelines and investor appetite for credit‑enhanced securities. LSEG data show total insured par reaching $7.704 billion, up from $7.342 billion a year earlier, despite a slight dip in deal count. This growth underscores the role of insurers in stabilizing pricing and expanding the investor base for municipal debt, especially as municipalities seek to fund infrastructure projects in a higher‑interest‑rate environment.

Competitive dynamics shifted noticeably as Assured Guaranty, long the market leader, saw its share contract to 53.1% after a 11.9% decline in insured par. The insurer emphasized selective underwriting and value‑added guarantees, yet its reduced volume opened space for BAM, which posted a 34% year‑over‑year surge to $3.61 billion and captured 46.9% of the market. BAM’s aggressive expansion, highlighted by record secondary‑market trades and a focus on new‑money issuances, reflects a strategic push to capitalize on volatility and diversify its portfolio across education, water, and local government projects.

For issuers, the expanding insurance coverage translates into lower borrowing costs, higher liquidity, and greater access to capital markets. Education borrowers, in particular, benefited from BAM’s targeted underwriting, with 30% of its insured par tied to K‑12 projects and sizable deals for universities. As municipalities continue to navigate fiscal pressures, the availability of reliable guaranty products will remain a key lever for managing debt service and attracting a broader investor set, positioning bond insurers as essential facilitators of public‑sector financing in the coming years.