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March 18, 2020

BAM-Insured Municipal Bonds and COVID-19

Federal, state, and local government reactions to the spread of the novel coronavirus and a surge in COVID-19 cases are leading to a wave of questions about the fundamental credit quality of U.S. municipal bond issuers, given the potential for extended disruptions to economic activity.

As investors consider how to deploy their funds in this volatile environment, BAM-insured municipal bonds can be an important component of fixed-income portfolios. All BAM-insured bonds are rated AA with a Stable outlook by S&P Global Ratings. BAM guarantees timely payment of interest and principal, backed by more than $900 million of claims-paying resources. BAM’s promise is unconditional and irrevocable, even if an issuer’s regular operations are disrupted by work-from-home or shelter-in-place orders. BAM-insured bonds can also be used by investors to limit the risk of ratings volatility for specific issuers, increase liquidity of their position, and manage the risk concentrations within a portfolio.

To help investors understand BAM’s financial strength and approach to credit selection in the municipal market, we’ve assembled the following answers to frequently asked questions.