S&P Global Ratings Affirms BAM’s AA Rating and Stable Outlook

Rhea-AI Summary

S&P Global Ratings affirmed Build America Mutual's AA rating with a stable outlook, the highest for any active bond insurer. The analysis highlighted increased demand for BAM-insured municipal bonds, which surged 27% to a record $9.5 billion in H1 2021. The report praised BAM's strong capital adequacy, low-risk portfolio, and credit discipline. CEO Seán W. McCarthy noted that investors use BAM insurance to enhance liquidity and credit quality. Since its launch in 2012, BAM has insured over $96 billion in municipal securities across more than 11,000 transactions.

Positive

• Affirmation of AA rating enhances BAM's credibility and investor confidence.
• 27% increase in BAM-insured municipal bond sales to $9.5 billion in H1 2021 indicates strong demand.
• Recognition of BAM's excellent capital adequacy and low-risk portfolio.
• BAM's insurance helps improve liquidity and credit quality for investors.

Negative

• None.

S&P Global Ratings published its full annual analysis of Build America Mutual and affirmed BAM’s AA rating and stable outlook, the strongest rating S&P assigns to any active bond insurer.

S&P’s analysts found that municipal bond investors have demonstrated “a heightened focus on credit quality, trading value stability, and market liquidity,” since the second half of 2020, and that “these factors drive the demand for bonds insured by BAM.” BAM-insured municipal bond sales increased 27% in the first half of 2021 to a record $9.5 billion, which followed a full-year record for par insured in 2020.

The report recognized BAM’s “excellent” capital adequacy, “proven record of credit discipline,” and low-risk portfolio, which includes only U.S. municipal bonds from issuers who provide essential public services. BAM “has a broad presence across the U.S. and its insured exposure represents the lowest risk sectors, as measured by S&P Global Ratings capital charges,” the agency said in its report.

“The S&P report recognizes that more investors are utilizing BAM insurance to preserve value in their portfolios by enhancing the liquidity and credit quality of their holdings,” said BAM Chief Executive Officer Seán W. McCarthy. “Our member issuers, in turn, are able to leverage that broader demand to achieve efficient capital markets access as they invest in critical infrastructure nationwide.”

About Build America Mutual

BAM is a mutual bond insurance company operated for the benefit of its members – the cities, states and other municipal entities that use BAM’s financial guaranty to lower their cost of borrowing. BAM is the official provider of bond insurance for the National League of Cities, and was launched in 2012 with initial capital provided by subsidiaries of White Mountains Insurance Group, Ltd. (NYSE:WTM)

Through June 30, 2021, BAM has insured more than $96 billion of municipal securities in more than 11,000 primary and secondary market transactions.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210729005375/en/

FAQ

What is the current S&P rating of Build America Mutual (WTM)?

Build America Mutual has an S&P rating of AA with a stable outlook.

How much did BAM-insured municipal bond sales increase in 2021?

BAM-insured municipal bond sales increased by 27% to a record $9.5 billion in the first half of 2021.

What are the main benefits of BAM’s bond insurance for investors?

BAM’s bond insurance enhances liquidity and credit quality of municipal bond portfolios.

How much municipal securities has BAM insured since its launch?

Since its launch in 2012, BAM has insured more than $96 billion of municipal securities.