Assured Guaranty Statement on Puerto Rico Custodial Trust Units Related to Assured Insured HTA Bonds

December 9, 2022

The court-approved Modified Fifth Amended Title III Plan of Adjustment of the Puerto Rico Highways and Transportation Authority (Plan), provides that Assured Guaranty Municipal Corp. (AGM) and Assured Guaranty Corp. (AGC and, together with AGM, Assured Guaranty) insured Puerto Rico Highways and Transportation Authority Bonds (Assured Insured HTA Bonds) were accelerated and immediately due and payable as of December 6, 2022, the date the Plan became effective (the HTA Effective Date). Capitalized terms used without definition in this statement have the meanings assigned to such terms in the Plan.

Pursuant to the court-approved Plan, and consistent with Assured Guaranty’s rights under the applicable insurance policies, Assured Guaranty may 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 (the Assured Election). 

As described in a previous Company Statement, Assured Guaranty did not exercise the Assured Election for those Assured Insured HTA Bonds identified on schedule B (Schedule B Bonds) of that Company Statement. Instead, consistent with the approved Plan, Assured Guaranty determined that the holders of the Schedule B Bonds could elect either: 

  • to receive, on the HTA Effective Date, an acceleration price of one hundred percent (100%) of the principal amount outstanding at that time plus accrued interest thereon to the date of payment (the Acceleration Price), or 
  • Assured Bondholder Election 2 (described in greater detail immediately below).

As of the HTA Effective Date, the Schedule B Bonds whose holders elected, or were deemed to have elected, Assured Bondholder Election 2 (the Election 2 Bonds) were exchanged for certain Trust Units. 

The Trust Units represent an interest in a custodial trust established for the related Election 2 Bonds that holds: 

  • certain new bonds backed by toll revenues (Toll Bonds), and accrued interest on such Toll Bonds, delivered by the HTA on the HTA Effective Date; and 
  • the AGM or AGC insurance policy related to the Election 2 Bonds (the Legacy Insurance Policy). 

Following the HTA Effective Date, the Legacy Insurance Policy continues to insure, in accordance with its terms, payment of principal (the Legacy Insured Principal) and interest (the Legacy Insured Interest) in the original amounts, and on the original payment dates, as the Legacy Insurance Policy insured for the Election 2 Bonds immediately prior to the exchange, subject to the details below.

The Trust Units have a Notional Amount equal to the Legacy Insured Principal amount. Therefore, at the HTA Effective Date, the Notional Amount of the Trust Units equaled the outstanding principal amount of the Election 2 Bonds immediately prior to the exchange.

As the trust receives (i) accrued interest delivered on the HTA Effective Date by the HTA, (ii) payments on the Toll Bonds, and (iii) proceeds from the sale of any Toll Bonds, it will promptly distribute these amounts to the Trust Unit holders. Such cash distributions, as of the date they are made, will first pay accrued Legacy Insured Interest and then Legacy Insured Principal and, as a result, reduce the Notional Amount of the Trust Units. To the extent the distributions described in the immediately preceding sentence are insufficient to pay or prepay Legacy Insured Interest and/or Legacy Insured Principal on or before an originally scheduled payment date, AGM or AGC will make such payment in accordance with its Legacy Insurance Policy.

Consistent with the terms of the approved Plan and Assured Guaranty’s rights under the applicable insurance policies, Assured Guaranty has retained the right to satisfy its obligations under its Legacy Insurance Policies 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 issued in connection therewith.

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


Any forward-looking statements made in this statement 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 relating to whether or not Assured Guaranty elects to satisfy its obligations under its Legacy Insurance Policies in the future, with 30 days’ notice to the relevant Trust Unit holders, by paying the Acceleration Price; future litigation; 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 December 9, 2022. 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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