Assured Guaranty pays $42M to insured PR bondholders

Written by  //  January 5, 2017  //  Financial District, Insurance  //  No comments

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Dominic Frederico

Two bond insurance subsidiaries of Assured Guaranty Ltd., together with its subsidiaries, Assured Guaranty, have made interest payments to holders of insured General Obligation and other bonds after Puerto Rico and certain of its agencies failed to pay on Jan. 3, the company said Wednesday.

The company has paid or expects to pay $42 million to bondholders for the Commonwealth bond interest payments in default, estimated at $116 million.

The list of public corporations on the default list are: the Puerto Rico Public Buildings Authority; the Puerto Rico Highways and Transportation Authority; the Puerto Rico Convention Center District Authority; the Puerto Rico Infrastructure Financing Authority; the Puerto Rico Aqueduct and Sewer Authority; the Puerto Rico Municipal Finance Agency; the Puerto Rico Sales Tax Financing Corporation; and the University of Puerto Rico.

“As always, investors owning Puerto Rico-related bonds insured by Assured Guaranty will continue to receive uninterrupted full and timely payment of scheduled principal and interest in accordance with the terms of Assured Guaranty’s insurance policies,” the company said.

“While the outgoing Puerto Rico administration has once again chosen to violate Puerto Rico’s constitution by ignoring the senior payment priority securing the Commonwealth’s GO bonds, we look forward to working with the new administration, Oversight Board and other creditors to achieve consensual restructuring agreements that respect the constitutional, statutory, contractual and property rights of creditors while also supporting the island’s economic recovery,” said Dominic Frederico, president of Assured Guaranty.

The bond trustee, paying agent or, in the case of secondary market policies, custodian files a claim with Assured Guaranty on behalf of the bondholders, and therefore no action is required on the part of investors to receive their scheduled debt service payments.

Once Assured Guaranty receives a filed claim, it makes the payment directly to the relevant bond trustee, paying agent or custodian, who then distributes the funds in the same manner as when paid by the issuer.

Under its standard municipal bond insurance policy, Assured Guaranty makes its claim payment no later than one business day after it receives the claim, but not before the payment due date, the company noted.

Also on Jan. 3, the Puerto Rico Electric Power Authority made the full interest payment due on its bonds insured by Assured Guaranty, and no insurance claims were filed in respect of such bonds.

“We were pleased that PREPA made its bond interest payment, and we continue to join PREPA and the other participating creditors in seeking implementation of the consensual restructuring contemplated by the PREPA restructuring support agreement,” Frederico said.

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