Home Insurance Glossary - Financial Guaranty Insurance

The Definition of "Financial Guaranty Insurance" is:

Covers losses from specific financial transactions and guarantees that investors in debt instruments, such as municipal bonds, receive timely payment of principal and interest if there is a default. Raises the credit rating of debt to which the guarantee is attached. Investment bankers who sell asset-backed securities, securities backed by loan portfolios, use this insurance to enhance marketability.
(See: Municipal bond insurance)


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