Assured Guaranty Ltd., the holding company of the two principal players in the bond insurance industry, announced late Monday night that it would sell 23,924,000 common shares in a public offering Thursday.
The announcement comes in response to the Nov. 12 decision by Moody’s Investors Service to downgrade the insurance financial strength rating of bond insurer Assured Guaranty Corp. to Aa3 from Aa2. In that decision Moody’s said that unless “capital-strengthening initiatives” were undertaken, it would expect to lower the parent company’s rating into the single-A range. Assured Guaranty Municipal Corp. retained its Aa3 rating from Moody’s.
In a conference for investors on Tuesday, chief executive officer and president Dominic Frederico reiterated that while he disagrees with Moody’s assessment, it is in the best interest of the company to implement the capital initiatives in order to stabilize, and even improve, the company’s ratings.
“Assured Guaranty intends to use the net proceeds of the offering for general corporate purposes and to complete the external capital portion of the rating agency capital initiatives for its subsidiaries,” the company said in the announcement.
Assured also granted the underwriter, UBS Securities LLC, a 30-day option to purchase up to an additional 3,588,600 common shares.
Willis Capital Markets and Advisory served as transaction adviser for the insurer.
Assured Guaranty stock closed 3.48% lower today at $21.89 per share.