NEW YORK, July 15, 2015 /PRNewswire/ -- Andrew Kalotay Associates, a leading independent provider of analytics for the fixed-income market, today announced a new online tool to help municipal bond issuers and their professional advisors assess whether buying bond insurance will reduce the overall cost of debt service. The "Municipal Insurance Evaluator," known as MINER(tm), is available for free on the firm's web site at analytics.kalotay.com/miner.
"Bond insurance is making a comeback, and it's no longer a commodity product. MINER lets individual issuers decide whether insurance makes sense for their transaction, and helps them identify the best bid in a competitive situation," said Dr. Andrew Kalotay, the firm's founder and president.
In addition to evaluating whether insurance is cost-effective for a specific bond maturity, MINER provides analytics to compare different insurance-premium structures, including the traditional method of paying the entire premium up-front or paying a smaller up-front premium followed by annual payments commencing on the first call date. It can also value a credit offered if the bonds are refunded prior to their final maturity. The new pricing options generally benefit issuers whose bonds are refunded prior to maturity, but quantifying the benefit requires the use of sophisticated models that incorporate the probability that a bond will be refinanced. Currently, MINER evaluates a single maturity at a time, but future versions will incorporate complete bond issues.
"When the premium depends on when the bond is refunded, calculating the expected cost of the premium is challenging," Dr. Kalotay said. "We believe that MINER will enable issuers and their advisors to make the right choice. The approach is described in our paper, 'Insuring Callable Bonds: Selecting the Right Payment Plan' published in the Journal of Risk Finance. The underlying technology is the same as that used in our Refunding+ decision tool."
For more information, contact:
Head of Business Development
Andrew Kalotay Associates, Inc.
61 Broadway, New York, NY 10006
SOURCE Andrew Kalotay Associates, Inc.