bond-basics

Bond Insurance (Policy)

A financial Guaranty insurance policy provided by a Bond Insurer which pledges to make scheduled payments of Interest and Principal of a Bond Issue in the event the Issuer is unable to make those payments on time. The Bond Insurer is typically given rights under the bond documents and will direct remedies on Default.


See Also

Bond Insurer

A company that issues the bond insurance policy for a bond issue.

Guaranty

A third party’s promise to pay the debt service on the bonds or perform some other obligation, which is the primary obligation of another party.

Default

Breach of a covenant, promise or duty imposed by the bond, bond resolution/ordinance, an indenture or other financing document.

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Trust Indenture Act of 1939

A federal statute setting out the requirements for trust indentures in connection with publicly traded corporate securities.