Јасмина Лабудовић Станковић, Слободан Јовановић

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The author deals with municipal bond insurance. This insurance has existed in the world since 1970s. Municipal bond insurance against the risk of default increases bond rating and makes positive influence on the willingness of investors to buy these financial instruments. It also contributes to improving market efficiency. Issuers, i.e. local governments, underwriters and investors may appear as policyholders. The paper is organised as follows. The second part, which comes after the introduction, deals with the basic types of municipal bonds, bearing in mind that the type of bond can also affect the bond insurance. The third part is dedicated to insured bonds and the fourth relates to the risks for which it is desirable to conclude insurance contract. The fifth section is dedicated to the problems faced by the municipal bond market in Serbia and to a proposal for its improvement, in terms of the introduction of municipal bond insurance, and then followed by a conclusion. The authors have used the comparative method for writing this paper.


municipal bonds, insurance, default risk

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