Bond insurance companies have made news again for policies they issued in the past to cover municipal bonds of dubious value:
Some financial creditors, like the bond insurer Syncora Guarantee, will get about 14 cents on the dollar for their debts, a low recovery rate but not as low as the city had initially proposed. Syncora and Financial Guaranty Insurance Company had insured a type of debt that was never very secure to begin with, and the city contended that low recoveries were appropriate given the level of risk.
Bond insurers' wanderings from the far-less-risky fields of coverage which they previously occupied has been the subject of many headlines here and elsewhere since the Financial Fiasco that burst into the open in 2007-2008. See, e.g., "Bond Insurance Premiums May Not Mean Protection for Munis" published here on January 8, 2014; "Gaming the Muni System: Another Kind of Muni Bond Insurance?" published here on May 23, 2010; and "Bank Bailouts, Bond Insurance, and a Better Way" published here on November 21, 2008. See also the many other articles archived here under the category of "Bond Insurance".
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