Municipal Bond Investors Assurance Corp. (MBIA) is an independent insurance company that will, for a free received from the issuer, insure the interest and principal payments on a municipal bond.
MBIA is a private insurance company that will insure a muni bond against the risk of default. An issuer may choose to insure its bond issue, as this will increase the safety of the bond and make it more attractive to investors. As with all insurance, there is a charge for this coverage.
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