National Public Finance Guarantee Corp., the municipal finance insurer owned by MBIA Inc. (MBI), was awarded an AA+ credit grade by Kroll Bond Rating Agency Inc., a ranking two levels above that of Standard & Poor’s.
The municipal bond insurer’s experienced management team, underwriting standards and earnings flexibility helped to obtain the rating that’s one level below AAA, Kroll said in a statement today.
Rising interest rates are poised to increase demand for bond insurance, according to Janney Montgomery Scott LLC. Municipal bonds issued with the guarantees increased to 4.4 percent of new-issue volume last quarter from 3.6 percent in 2013, Alan Schankel, managing director at the Philadelphia-based financial firm, wrote in a report last month.
MBIA has been seeking to restart business at its muni insurer after the company split itself in two in 2009. Use of the protection fell after the companies were largely stripped of their top ratings in 2008 amid losses on guarantees of subprime-mortgage-backed debt. Insurance covered almost 60 percent of issuance in 2005, according to Janney.
S&P raised subsidiaries of Assured Guaranty Ltd. (AGO) to AA, the third-highest level, and National Public Finance to AA-, one step lower, in March, citing better prospects for muni insurance.
Moody’s Investors Service rates National Public Finance Baa1, four steps below S&P and six less than Kroll.