Assured Guaranty Responds to Proposed Agreement for PREPA Restructuring

July 31, 2018

Assured Guaranty released the following statement in response to the announcement of an agreement in principle among the Financial Oversight and Management Board for Puerto Rico (Oversight Board), the Commonwealth Government, the Puerto Rico Electric Power Authority (PREPA) and certain Ad Hoc PREPA bondholders:

Assured Guaranty is not a party to the PREPA agreement announced today among PREPA, a subgroup of the utility’s creditors, the Oversight Board, and the Puerto Rico Government. We continue to support the Restructuring Support Agreement (RSA) originally agreed to by PREPA, its creditors, two successive Commonwealth administrations and PREPA’s regulators prior to enactment of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA). We believe that the government parties should measure success by their obligations and duties honored, not by the obligations and commitments cast aside.

The RSA was grandfathered into federal law, and nearly finalized, when the Oversight Board – newly created by PROMESA – refused to follow federal direction to execute the deal that had been agreed to by all sides.    

Through its actions, the Oversight Board ignored the clear intent of the PROMESA legislation and impeded PREPA’s modernization and revitalization. The Oversight Board and the Puerto Rico government continue to spend hundreds of millions of dollars on litigation and related expenses that, according to the latest Commonwealth fiscal plan, are estimated to total $1.5 billion over the next six years. This runs counter to the Oversight Board’s only specifically legislated purpose: to achieve fiscal responsibility and capital markets access.

We will continue to vigorously enforce our property rights as a secured creditor in the PREPA Title III case, while also continuing to seek engagement with government parties to consensually resolve these matters. We have been a long-term partner to the island and want to see it regain its stability, growth prospects and access to efficient financing for development needs. 

Puerto Rico’s economic recovery can succeed only with consensual agreements that honor the rule of law, make possible future capital markets access and assure a sustainable economic future for the people of Puerto Rico.  While we remain willing and ready to negotiate agreements that achieve these goals and look forward to constructive engagement around debt restructuring, we object to the development of fiscal plans that do not make reasonable assumptions as to the issuer’s ability to meet its obligations, and do not respect the liens and constitutional debt payment priorities established under Puerto Rico law, as required by PROMESA.