Assured Guaranty Responds to the Proposed Puerto Rico General Obligation Plan Support Agreement

June 17, 2019

Assured Guaranty does not support Puerto Rico’s proposed general obligation plan support agreement. It is premised on a number of terms that violate Puerto Rico law, its Constitution and PROMESA. These include, among others, an unprecedented and meritless attempt to invalidate certain lawfully issued general obligation bonds, acceptance of erroneous and misleading financial projections in the Oversight Board’s legally flawed fiscal plan, and artificial separation of similarly situated creditors into classes that would receive unequal treatment. This “deal,” backed by barely 10% of Commonwealth guaranteed and GO creditors, who bought positions at prices substantially below par, failed to include the largest general obligation creditors who have supported Puerto Rico for decades, and is a disservice to the residents and long term stakeholders of the island. 

Assured Guaranty has long promoted a constructive engagement between creditors and government representatives of Puerto Rico aimed towards a fair and consensual resolution of the Commonwealth’s current fiscal challenges. We continue to encourage the start of negotiations among Puerto Rico’s most important stakeholders. However, we cannot support an agreement that would prolong expensive litigation, while harming Puerto Rico’s long-term economic success and the national municipal bond market. If a plan of adjustment based on this agreement is confirmed by the Title III Court, it would erect a substantial barrier to Puerto Rico’s future capital market access and significantly erode the municipal bond market’s confidence in full faith and credit pledges, raising the cost of financing infrastructure and government services for municipalities across the country. We are prepared, if necessary, to litigate this matter to the fullest extent to protect our rights, those of municipal bond investors, and the rule of law.