Assured Guaranty Statement on Puerto Rico Custodial Trust Units Related to Assured Insured G.O. & PBA Bonds

April 4, 2022

The court-approved Modified Eighth Amended Title III Joint Plan of Adjustment of the Commonwealth of Puerto Rico (the Plan) provides that 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) were accelerated and immediately due and payable as of March 15, 2022, the Effective Date of the Plan. Capitalized terms used without definition in this statement have the meanings assigned to such terms in the Plan.

Consistent with Assured Guaranty’s rights under applicable insurance policies, and as a result of the approved Plan, Assured Guaranty can elect to make payment on any date when such payment is due by reason of acceleration or other advancement of maturity.

As described in a previous Company Statement, Assured Guaranty determined that holders of the Assured Insured Bonds identified on schedule B of that Company Statement could elect either (1) to be paid on the Effective Date of the Plan an acceleration price of one hundred percent (100%) of the principal amount outstanding at that time 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), or (2) Assured Bondholder Election 2 (described in greater detail immediately below).

On the Effective Date of the Plan, the Assured Insured Bonds identified on schedule B whose holders had elected, or were deemed to have elected, Assured Bondholder Election 2 (the Election 2 Bonds), were exchanged for certain Trust Units whose Notional Amount as of the Effective Date was equal to the outstanding principal amount of the Election 2 Bonds immediately prior to the exchange.

The Trust Units represent an interest in a custodial trust established for the related Election 2 Bonds CUSIP that holds: (a) certain new general obligation bonds and contingent value instruments (together, New Securities), as well as cash, delivered by the Commonwealth on the Effective Date of the Plan; and (b) the AGM or AGC insurance policy related to the original Assured Insured Bonds.

As the trust receives (i) cash initially delivered on the Effective Date, (ii) payments on the New Securities, and (iii) proceeds from the sale of any New Securities, it will distribute this to the Trust Unit holders; such cash distributions will first pay accrued interest and then principal and, as a result, reduce the principal amount outstanding of the Assured Insured Bonds and Notional Amount of the related Trust Units. To the extent the distributions described in the immediately preceding sentence are insufficient to pay principal and interest coming due on the Election 2 Bonds on the originally scheduled Election 2 Bond principal and interest payment dates, the AGM or AGC insurance policy will continue to guarantee such payments in accordance with the terms of such insurance policy.

Consistent with the terms of the Plan and Assured Guaranty’s rights under the applicable insurance policies, Assured Guaranty has retained the right to satisfy its obligations under its insurance policies with respect to the Election 2 Bonds at any time hereafter, with 30 days’ notice to the relevant Trust Unit holders, by paying the Acceleration Price.

Assured Guaranty makes no representations, warranties, or guarantees, and disclaims any liability, with respect to the tax treatment of any custodial trust established in connection with Election 2 Bonds, any payments made in connection with such a custodial trust, or any securities or other property held in such a trust or similar structure, or issued in connection therewith.

Attachment 1 provides additional details regarding the Election 2 Bonds and the Trust Units for which they were exchanged.

This website uses cookies. By using this website, you agree to our use of cookies. Click OK to agree and remove this banner, or visit our Privacy Policy to learn how we use cookies and to opt out.