Statement on Tentative Settlement with Detroit

April 9, 2014

The City of Detroit (City) and Assured Guaranty have reached a tentative settlement with respect to the treatment of the Assured Guaranty-insured unlimited tax general obligation bonds (UTGO Bonds) in the City’s proposed plan of adjustment. Assured Guaranty’s agreement with the City provides for the City’s continued payment of approximately 78% of future UTGO debt service, confirmation of both the secured status of the UTGO Bonds and the existence of a valid lien on the City’s pledged property tax revenues (UTGO Tax Revenues), a finding that the UTGO Tax Revenues constitute “special revenues” under the U.S. Bankruptcy Code, and the provision of additional security for the UTGO Bonds in the form of a statutory lien on, and intercept of, the City’s distributable state aid. After giving effect to post-petition payments made by Assured Guaranty on the UTGO Bonds, the settlement results in a minimum ultimate recovery of approximately 74% on the UTGO Bonds, with the ability to achieve a higher ultimate recovery rate over time if other debt creditors’ recoveries reach certain specified thresholds.

The settlement is subject to a number of conditions, including confirmation of a plan of adjustment that implements the terms of the settlement described above and the execution of definitive documentation.

Currently, Assured Guaranty’s net par exposure with respect to Detroit’s outstanding UTGO Bonds is approximately $127.8 million.  As always, investors that own Detroit UTGO Bonds insured by Assured Guaranty can be certain they will continue to receive timely payment of scheduled principal of, and interest on, their bonds in full in accordance with the terms of the Assured Guaranty bond insurance policies.

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