Assured Guaranty Announces Certain Determinations for Assured Insured Puerto Rico G.O. and PBA Bonds Under Title III Plan of Adjustment

September 17, 2021

The Seventh Amended Title III Joint Plan of Adjustment of the Commonwealth of Puerto Rico, as amended (the Plan), provides that all Assured Guaranty Corp. (AGC) and Assured Guaranty Municipal Corp. (AGM and, together with AGC, Assured Guaranty) insured Puerto Rico general obligation (G.O.) and Public Buildings Authority (PBA) bonds (together, Assured Insured Bonds) will be accelerated and immediately due and payable as of the Effective Date of the Plan. In accordance with the Plan, Assured Guaranty has made certain determinations as described below. Capitalized terms used without definition in this statement have the meanings assigned to such terms in the Plan.

Pursuant to the Plan, if confirmed by the Title III Court:  

  • all Assured Insured Bonds will be accelerated and immediately due and payable as of the Effective Date of the Plan and 
  • consistent with the Assured Election, and Assured Guaranty’s rights under the applicable insurance policies to elect, in its sole discretion, to make payment on any date when such payment is due by reason of acceleration or other advancement of maturity, holders of the Assured Insured Bonds identified on 
    schedule A will receive on the Effective Date of the Plan an acceleration price of one hundred percent (100%) of the principal amount thereof plus accrued interest thereon (or, in the case of any capital appreciation bonds, the compounded amount thereof) to the date of payment (the Acceleration Price).

Solely with respect to the Assured Insured Bonds identified on schedule B, Assured Guaranty did not exercise the Assured Election and instead, consistent with the Plan, has offered to the applicable Assured Insured Bondholders a choice of two Assured Bondholder Elections - Assured Bondholder Election 1 and Assured Bondholder Election 2.

  • Assured Bondholder Election 1. An Assured Insured Bondholder’s election of Assured Bondholder Election 1 would result in such bondholder being paid the applicable Acceleration Price on the Effective Date of the Plan. 
  • Assured Bondholder Election 2. An Assured Insured Bondholder’s election of Assured Bondholder Election 2 would result in the deposit into a custodial trust or similar structure established by Assured Guaranty of (i) the applicable Assured Guaranty insurance policy and (ii) certain new general obligation bonds, contingent value instruments and cash, if any (Plan Consideration), delivered by the Commonwealth as distributions under the Plan. Subject to the terms of the final documentation that govern the terms of the custodial trust, distributions of Plan Consideration will be immediately passed through to such bondholders to the extent of any cash or proceeds of new securities held in the custodial trust and will be applied to make payments and/or prepayments of amounts due under the legacy insured bonds. To the extent that distributions of Plan Consideration are insufficient to pay principal and interest coming due on the legacy Assured Insured Bonds after giving effect to the distributions described in the immediately preceding sentence, Assured Guaranty’s insurance policy will continue to guarantee such payments in accordance with the terms of such insurance policy on the originally scheduled legacy bond interest and principal payment dates. Copies of the documents governing the terms of the custodial trusts will be available for review by such bondholders in connection with the distribution of a supplement to the Plan. 

    An Assured Insured Bondholder’s failure to make an election will be deemed to be an election of Assured Bondholder Election 2. In the case of any Assured Insured Bonds the holders of which have elected, or are deemed to have elected, Assured Bondholder Election 2, Assured Guaranty will retain the right to satisfy its obligations under its insurance policy with respect to such bonds at any time thereafter, with 30 days’ notice to the relevant holders, by paying the applicable Acceleration Price.  Retention by Assured Guaranty of this right to satisfy its obligations under its insurance policy with respect to the relevant Assured Insured Bonds by paying the Acceleration Price is authorized by the Plan and Assured Guaranty’s rights under the related Assured Guaranty insurance policies and will be reflected in the applicable custodial trust documentation. Assured Guaranty makes no representations, warranties, or guarantees, and disclaims any liability, with respect to the tax treatment of any custodial trust or similar structure established in connection with Assured Bondholder Election 2, any payments made in connection with such a custodial trust or similar structure, or any securities or other property held in such a trust or similar structure, or issued in connection therewith.

From and after payment of the Acceleration Price on the Effective Date or other date of payment selected by Assured Guaranty, with 30 days’ notice, interest on such Assured Insured Bonds shall cease to accrue and be payable. 

Payment of the applicable Acceleration Price with respect to any Assured Insured Bond shall satisfy and discharge all of Assured Guaranty’s obligations under the Assured Guaranty insurance policies with respect to such Assured Insured Bond. 

Concurrent with distribution of the disclosure statement relating to the Plan and solicitation of votes on the Plan, holders of Assured Insured Bonds will receive a notice informing them of the treatment of their bond claims under the Plan and Assured Guaranty insurance policies, and whether the particular Assured Insured Bonds owned by them will be subject to the Assured Election or Assured Bondholder Elections 1 and 2 as described above.


The information set out above contains forward-looking statements that reflect Assured Guaranty’s current views with respect to future events and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. These risks and uncertainties include, but are not limited to, those resulting from the failure of the Plan to be confirmed by the Title III Court as anticipated by Assured Guaranty or a successful legal challenge to relevant portions of the Plan, Assured Guaranty's inability to execute its strategies, including its loss mitigation and risk remediation strategies, and negative developments that may impact Assured Guaranty's liquidity and capital, and therefore its ability to make claim payments on time and in full, including less demand for Assured Guaranty's financial guaranty product, or adverse developments with respect to its insured or investment portfolio, and other risks and uncertainties that have not been identified at this time, management's response to these factors, and other risk factors identified in Assured Guaranty’s filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which are made as of September 17, 2021. Assured Guaranty undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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