Global Infrastructure Finance

For more than three decades, Assured Guaranty has worked with local and sovereign governments, regulated utilities, and private-sector developers and operators, along with their bankers and advisors, to reduce the medium- and long-term funding cost of essential projects and services.  We are active in developed countries with investment-grade sovereign ratings in the Americas, Europe and the Asia-Pacific.

Among the issuers who can benefit are:

  • Public-private partnerships (PPP/P3)
  • Special purpose infrastructure companies/projects
  • Essential infrastructure companies/assets (e.g. airports, ports)
  • Regulated utility companies
  • Renewable energy projects
  • Sovereign issuers
  • Municipal and local authority issuers
  • Government-sponsored enterprises

Guaranteed infrastructure financings have the characteristics to meet fundamental demand from pension funds, insurance companies and other institutional investors seeking long-tenor, low-risk investments that are well matched to distant future liabilities. They also help banks compete for business, increase returns and manage lending capacity.

In addition to unconditionally guaranteeing timely payment of principal and interest, we add value through our credit skills, ability to negotiate documentation appropriate for our guaranty and ongoing surveillance capability. Our guarantees help issuers gain capital market access and achieve broader distribution in both domestic and cross-border markets, while providing investors credit protection and potentially enhanced market liquidity.

Alongside our longstanding U.S. public finance business, Assured Guaranty subsidiaries have written guarantees for sovereign, municipal and public infrastructure financings outside the United States since 1988. Our broad experience encompasses highways, bridges, tunnels, airports, rail projects, hospitals, water and waste management facilities, gas and electric distribution systems, solar power, government buildings, convention centers, stadiums, universities and other infrastructure.

We provide credit enhancement for listed bonds, private placements with sole or a restricted number of institutional investors, and bank loans. We apply our guaranty in both primary and secondary markets and to issues with fixed, floating or inflation-indexed interest rates.

Assured Guaranty subsidiaries have the ability to guarantee qualified infrastructure financings in the United States, United Kingdom and most countries of the European Union, as well as in Australia, New Zealand and certain other developed countries of Asia and the Americas. We maintain close contact with lenders, investors and borrowers in our various markets. 

Eligible infrastructure transactions finance essential public projects or services. We require that both the transaction’s underlying credit quality and the sovereign rating of the country of origin be at least investment-grade, and we apply other criteria appropriate for the transaction’s revenue sources, credit characteristics, transaction structure and expected return. Transaction structures are subject to local regulation, and not all applications of our guarantees can be made available in every jurisdiction.

Assured Guaranty Exposure to UK Water

Assured Guaranty UK Limited (AGUK) and Assured Guaranty (Europe) SA (AGE) are two bond insurance subsidiaries of Assured Guaranty Ltd. (NYSE: AGO) (together with its subsidiaries, Assured Guaranty or The Company).

The gross insured par exposure of the Assured Guaranty group to the UK water sector is $12 billion (GBP 9.8 billion).

The UK water sector makes up approximately 5% of Assured Guaranty’s total net par outstanding.

The gross insured par exposure of AGUK to the UK water sector is GBP 4.2 billion (EUR 4.8 billion) and net exposure is GBP 589 million (EUR 670 million).

The gross insured par exposure of AGE to the UK water sector is GBP 1.58 billion (EUR 1.8 billion) and net exposure is GBP 109 million (EUR 124 million).

Assured Guaranty’s gross par exposure to Thames Water is GBP 1.54 billion ($1.9 billion USD).

The gross insured par exposure of AGUK to Thames Water is GBP 583 million (EUR 644 million) and net exposure is GBP 61 million (EUR 69 million).

The gross insured par exposure of AGE to Thames Water is GBP 306 million (EUR 349 million) and net exposure is GBP 16.1 million (EUR 18.3 million).

All exposure information above is as of March 31, 2023.

Our views on Thames Water and the UK Water Sector generally including safeguards and mitigants:

  • Assured Guaranty’s insured UK water company debt has a strong credit profile. The UK Water companies provide an essential public service and are in a well-regulated industry where Assured Guaranty guarantees the senior level debt, all of which has underlying investment grade ratings.
  • Assured Guaranty’s UK water debt exposure is composed of 15 unique obligors.
  • There is currently no default of the debt that Assured Guaranty guarantees, and all issuers guaranteed by Assured Guaranty are in compliance with the financial covenants applicable to the debt Assured Guaranty has guaranteed.

Regulated by Ofwat (Water Services Regulation Authority)

Thames Water and the other UK water companies continue to operate within their regulatory financial covenants set by Ofwat.

We would highlight the following factors arising out of the regulatory framework applying to the UK water sector:

  • The privately owned water utilities operate like a monopoly in their service area and function under a regulatory regime governed by Ofwat.
  • The regulatory framework determines tariffs every 5 years (next one starts in 2025), following a process of intensive reviews of each company’s operating budgets and capex plans. The tariff determination is based on revenue requirements composed of operating expenses, economic depreciation (maintenance capex), tax and return on capital (i.e., regulation provides for equity to earn a return on their investment).
  • All the utilities have provisions in their regulatory licenses which include (i) the legal separation of the regulated entity from any unregulated businesses, (ii) limitations on business activities, and (iii) provisions to maintain an investment grade rating.
  • Ofwat requires that each company “must ensure” that it will maintain an investment grade rating.
  • Companies may not, without Ofwat’s consent, pay dividends while their credit rating is Baa3/BBB-, with a negative outlook or lower.

Against this regulatory backdrop, we would make the following comments relating to the Assured Guaranty portfolio:

  • Assured Guaranty has guaranteed only senior Class A debt at the regulated operating company level (not Holding Company debt, or subordinated debt). This means that Assured Guaranty’s exposure is covered by the Ofwat regulatory regime.
  • The regulated operating company revenues in the UK water sector are ring-fenced and protected against default of the Holding Company.
  • Thames Water currently has GBP4.4bn of liquidity available and in July 2023 shareholders announced a further GBP750m support. It should also be noted that shareholder support has been announced for other UK water companies.
  • Additionally, Thames Water has a debt service reserve fund for the Operating Company debt equal to 12 months.
  • Ongoing interest cover at Thames Water remains around 3 times.
  • More broadly, interest coverage for all UK water obligors that Assured Guaranty has guaranteed is strong, with all but two obligors above 3 times (of the two that are below 3X, one is at 1.5X and one is at 2.7X, Assured Guaranty’s highest coverage is at 8.2X)
  • In the event that there was ever a claim filed against Assured Guaranty, claim payments comprise scheduled interest and principal payments as set out in the original debt schedule.
  • Only Assured Guaranty can accelerate its guarantees. Assured Guaranty can therefore choose to continue paying principal and interest in line with the original debt schedule.
  • Assured Guaranty’s UK water portfolio has maturities between 2028 and 2062.

All information is as of August 1, 2023, except as specified in this Statement.

**

€125,000,000


PHOTOVOLTAIC SOLAR
(PV) PLANTS, SPAIN

 

ANSELMA ISSUER SA, 2021
FIXED RATE BONDS

 

Q-ENERGY ASSET
MANAGEMENT S.L. (OPERATOR)




Contacts

International

  • Nick Proud
  • Senior Managing Director
  • 44 0 20 7562 1910
  • Email
  •  
  • Dominic Nathan
  • Senior Managing Director
  • 44 0 20 7562 1915
  • Email
  •  
  • Raphaël de Tapol
  • Managing Director
  • 33 6 31 81 51 88
  • Email

The Americas

  • Lorne Potash
  • Managing Director, Infrastructure Finance 
  • 1 212 261 5579
  • Email
  •  
  • Christopher Jumper
  • Director, Infrastructure Finance
  • 1 212 261 5514
  • Email
  •  
  • Sam Nakhleh
  • Director, Infrastructure Finance
  • 1 212 261 5522
  • Email

All Infrastructure Finance Contacts

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