The deadline to tender residential mortgage-backed securities insured by Syncora Guarantee Inc. has once again been extended, to 11:59 p.m. EDT June 22 from 11:59 p.m. June 19.
The tender offer is the second part of Syncora’s strategy to reduce its structured finance exposures and remedy its $2.4 billion policyholders’ deficit. Last month, the bond insurer executed an agreement with 25 financial counterparties to commute or restructure $56 billion in credit-default swap exposure.
It needs both deals to go through to fix its deficit.
Syncora continues to make progress on the tender offer. It reported securities representing 51.5 remediation points had been tendered, up from 40.7 on June 5. It needs securities representing 72 remediation points to be tendered to complete the deal.
Syncora has also agreed to increase the financing it will provide for the deal to $420 million from $375 million. BCP Voyager Master Funds SPC Ltd., acting on behalf of and for the account of the Distressed Opportunities Master Segregated Portfolio, is purchasing the securities.
Syncora says it is still in discussions with the New York Insurance Department over its restructuring.
A spokesman for the Insurance Department had said the reduction of the credit-default swap exposure represented “significant progress” and that the department would continue to monitor the results of the tender offer.
“The New York State Department of Insurance has been informed of the offer, and the closing of the offer and related financing are conditioned upon the approval of the NYID,” Syncora said. “Syncora Guarantee and the NYID continue to discuss the status of the offer and Syncora Guarantee’s overall restructuring plan.”
The department signed an order in April giving Syncora until May 29 to take “steps as may be necessary” to fix its statutory deficit. It also required Syncora in May to suspend its claims payments until the deficit was fixed.
Syncora May 20 said it had failed to pay claims totaling $61.7 million on eight insurance policies since it suspended payments, according to documents it has filed. It is unknown how many, if any, of the claims relate to municipal policies.
As part of its agreement with the financial counterparties, Syncora created a drop-down insurer, Syncora Capital Assurance Inc., to provide cut-through reinsurance on its public finance and global infrastructure credits. The drop-down insurance company, which will insure all remaining CDS exposures, would have had a policyholders’ surplus of $292 million as of March 31, if the deals had been completed.
Syncora will capitalize SCA with equity of $210 million and with a purchase of two surplus notes with a total principal amount of $350 million. Syncora Guarantee would have had a policyholders’ surplus of $150 million as of March 31, if the deals had been completed.
Since 2001, Syncora has insured 3,092 municipal issues with a par value of $66.1 million, according to Thomson Reuters. It insured just three issues last year with a par value of $35.6 million.
Moody’s Investors Service currently assigns Syncora a Ca rating with a developing outlook. Standard & Poor’s rates Syncora R, noting it is under regulatory supervision.
