Credit wrap

{
  "id": "MLC-T-INS-001028",
  "term": "Credit wrap",
  "field": "Insurance and risk management",
  "definition": "A form of financial guarantee, usually provided by an insurer or bank, that covers the payment of principal and interest on a debt security in the event of the issuer's default. By assuming the issuer's credit risk, the guarantor's higher credit rating is substituted for the issuer's lower one. This type of insurance is applied to instruments such as municipal bonds and asset-backed securities, where the wrap is legally inseparable from the underlying security.",
  "url": "https://mlchart.com/terminology/insurance/credit-wrap/"
}