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Liburkina L. M.

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Bond Borrowing Insurance: A Method of Increasing the Debt Sustainability of Territorial Communities
Koblyk I. I.

Koblyk, Ihor I. (2024) “Bond Borrowing Insurance: A Method of Increasing the Debt Sustainability of Territorial Communities.” Business Inform 10:745–745.
https://doi.org/10.32983/2222-4459-2024-10-745-745

Section: Finance, Money Circulation and Credit

Article is written in Ukrainian
Downloads/views: 0

UDC 336.15,336.3

Abstract:
Municipal bond insurance is an important method for ensuring the debt sustainability of territorial communities. It provides guarantees to investors, reducing the risks associated with possible financial difficulties of bond issuers, such as local authorities. This helps to improve the credit rating of issuers and increase the attractiveness of municipal bonds for investors, which, in turn, allows local communities to attract additional financing on more favorable terms. The bond insurance mechanism is beneficial for both issuers and investors. It allows local governments to reduce debt service costs by providing access to resources for socioeconomic initiatives, infrastructure development, and pivotal projects. This contributes to the sustainable development of communities and their financial stability, which is especially important in the context of limited budget resources. In the United States, the municipal bond insurance market is well developed. Major insurers such as Assured Guaranty and Build America Mutual cover a significant proportion of new bond issuances, providing credit protection and reducing investors’ vulnerability to economic fluctuations. This ensures market liquidity and helps to maintain the investment attractiveness of debt financing even during crisis periods. In Europe, municipal bond insurance is developing more slowly, but new opportunities are emerging, especially with the integration of the Ukrainian market. In addition, bond insurance allows you to expand the circle of potential investors, because the presence of an insurance guarantee makes local loan bonds more attractive even for more conservative investors, who usually avoid risky investments. Thanks to this, the municipal bond market receives additional opportunities for development, and communities have access to new sources of financing, which contributes to their resilience and stability.

Keywords: debt, local borrowing, debt sustainability, local loan bonds.

Fig.: 1. Tabl.: 2. Bibl.: 13.

Koblyk Ihor I. – Candidate of Sciences (Economics), Senior Research Fellow, Department of Regional Financial Policy, Institute of Regional Research named after M. I. Dolishniy of the NAS of Ukraine (4 Kozelnytska Str., Lvіv, 79026, Ukraine)
Email: [email protected]

List of references in article

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