Assured Guaranty Ltd. subsidiaries made $43 million of interest payments to holders of insured general obligation and other bonds after Puerto Rico and certain of its instrumentalities failed to pay on Jan. 3.
The largest bond insurer said that
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.
"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, PROMESA 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 and chief executive officer of Assured.
"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.
For any obligor where amounts were due but no claims are expected, the payments were made by the obligor from its available funds or reserves, the insurer said in the release. 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 the insurance policies.
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, according to the release. Once Assured Guaranty receives a filed claim, it makes the claim 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.
Assured Guaranty said its liquidity and capital positon are strong, with $12 billion in claims-paying resources across its group of companies and approximately $400 million generated each year from its $11 billion investment portfolio. Assured Guaranty estimates that its excess capital was more than $2.6 billion above S&P's triple-A requirement as of year-end 2015.
