Benefits for Investors
For investors in asset-backed securities and other structured financings, we provide not only credit protection but also a range of value-added services.
Timely payment: In the rare event of an issuer’s failure to make a scheduled payment of interest or principal, Assured Guaranty will make the payment as scheduled. There is no interruption of payment.
Detailed collateral analysis and due diligence: Structured financings depend on good portfolio selection, rigorous analysis, and reliable performance by a host of parties, including: borrowers and loan originators associated with the underlying assets; custodians; primary and backup servicers; liquidity providers; and swap counterparties. Because we have our own capital at risk, our work is valuable to investors in their assessment and risk management of these transactions. We model potential collateral performance under multiple economic stress scenarios, conducting file reviews to verify compliance with asset origination standards and evaluating the competence and creditworthiness of the various parties.
Surveillance and remediation: Our surveillance operations allow us to spot potential trouble early and take steps to protect transaction performance. In transactions insured at issuance, we typically have rights and remedies beyond those normally available to any one investor, and we can work directly with sellers and servicers to solve problems before they become serious. In many cases, we have the right to transfer servicing, and we can implement efficient transfers through our established relationships with highly qualified servicers. Additionally, if we discover that a portfolio contains underlying loans originated in breach of the original representations and warranties, we will take action to enforce the seller’s obligation to repurchase the assets, a process that would be far more difficult for a group of uninsured investors.
Portfolio suitability: Assured Guaranty’s high credit ratings may allow an investor to acquire a position for which it would otherwise lack capacity because of credit quality constraints, risk-weighted capital requirements or single- or aggregate-risk limits.