A form of financial guarantee insurance that does not cover all debts/ obligations of an insured- borrower but only a specific loan, debt issuance, or a similar financial transaction. The credit wrap provides protection to investors against any losses associated with the insured obligation by standing ready to pay back a specific portion of the interest or principal as determined in the contract.

The financial guarantee insurance means that an insurer will secure timely payment and repayment of the insured’s obligations such as a bond issue.

A credit wrap (or simply, a wrap) is a type of credit enhancement mechanism whereby credit protection for a debt instrument is provided by an insurer or bank to a customer in order to improve the credit quality of the instrument/ issue/ portfolio, etc.