Assured Guaranty Corp., the biggest municipal bond insurer, formally requested that the Puerto Rico Oversight Board revoke certification of its 10-year fiscal plan, saying it violates the Puerto Rico Oversight Management and Economic Stability Act.
Assured insures about $1.75 billion of bond issues guaranteed by the Commonwealth of Puerto Rico and $1.947 billion of secured revenue bonds issued by the Highway Transportation Authority, COFINA (sales tax), Puerto Rico Convention Center District Authority, University of Puerto Rico and Puerto Rico Infrastructure Financing Authority.
On March 13, the Financial Oversight and Management Board, which was created by the PROMESA to , certified the fiscal plan for Puerto Rico. On March 27, Assured and other creditors wrote to the board requesting additional information concerning the fiscal plan and complaining of deficiencies.
“If Puerto Rico is to regain credibility, secure market access for further investment, ensure retention of its residents and gain support for an improvement in its standing as a potential state, it and the Oversight Board in its supervisory role must begin by restoring and respecting the rule of law,” said the letter which was submitted April 5, which was signed by Assured’s president and chief executive officer, Dominic Frederico. “The current certified fiscal plan fails to respect both Puerto Rico’s own constitution and the United State federal law, including PROMESA.”
Assured requested that the Oversight Board revoke its certification of the March 13 fiscal plan on the grounds that it fails to comply with the mandatory statutory requirements prescribed by Section 201(b)(1) of PROMESA, which details requirements that the plan help the commonwealth chieve fiscal responsibility and regain access to capital markets while respecting the constitution and other laws with respect to priorities and liens.
“Assured further requests that the Oversight Board and the Government of Puerto Rico commence the process of developing a complaint and certifiable fiscal plan, the establishment of an appropriate reduced budget for essential services and the direct negotiation of a possible consensual restructuring of Puerto Rico’s debt," Assured said in the letter. "We believe this will form a basis to significantly advance toward our shared goals of reaching expeditious and consensual resolutions under Title VI of PROMESA and of long term stability and economic growth for Puerto Rico.”