A "wrapped" bond is insured by a third party, most commonly by a monoline insurance company, such as MBIA, AMBAC, FGIC, FSA, or XCLA. This is very prevalent in the municipal bond market and somewhat common in ABS.
E.g. The bond is A under with a FGIC wrapper.
Translation: The bond is rated AAA/Aaa due to FGIC insurance, and would be rated A without insurance.
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