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Assured Guaranty to guarantee another UK infrastructure bond

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© Business Wire 2014
2014-03-25 13:05:03 -

Assured Guaranty (Europe) Ltd. and an affiliate (Assured Guaranty)* announces that it will guarantee a £77 million wrapped bond, issued by Solutions 4 North Tyneside (Finance) PLC, to finance the development and refurbishment of homes for older people in the North Tyneside area. The publicly listed bond priced on 24 th March 2014 at 5.259%.

The project is using an innovative bond structure whereby the publicly listed bonds are funded over the construction period, thus mitigating the negative cost of carry associated with a typical bond structure that is fully funded on the day the bonds are issued.

The spread over the relevant forward curve Gilt rate is 185 basis points per annum, equivalent to a spread of 159 bps pa over the

relevant spot Gilt rate had the bonds been funded on a conventional basis on the day of issuance. The bonds have preliminary ratings of AA (stable outlook) and A2 (stable outlook), with preliminary underlying project ratings of BBB- and Baa3, from S&P and Moody's, respectively. Assured Guaranty was upgraded to AA by S&P on 18 th March 2014. Financial close is expected on 26 th March 2014.

The consortium, appointed as Preferred Bidder by North Tyneside Council, consists of Equitix, the infrastructure equity fund, and Miller Construction, providing equity and construction services, with Lloyds Bank as the bond arranger. North Tyneside council will fund debt service based on housing availability and receive related PFI credits from the UK Government.

As a financial guarantor, Assured Guaranty will guarantee timely payment of scheduled principal and interest to bondholders, throughout the 27-year life of the bond. Assured Guaranty will also guarantee the bondholder funding obligations during the construction period as an integral part of achieving the investment grade ratings.

Dominic Nathan, Managing Director, Assured Guaranty (Europe) Ltd., commented.

"We are particularly pleased with the innovative drawdown structure of this bond because the proceeds come in over the construction period rather than in a conventional single payment on the day when the bonds are issued, eliminating the negative cost of carry and thereby reducing the price significantly. This further strengthens the case for using wrapped bonds to finance infrastructure projects and attests to the value, flexibility and market acceptance of Assured Guaranty’s product."

The regeneration project includes partial demolition, new construction and refurbishment of existing homes in the North Tyneside area of 26 sites. At completion, these sites will contain over 900 housing units.

This will create a significantly improved quality of housing for the older residents of North Tyneside.


*Assured Guaranty (Europe) Ltd. provides its financial guarantee together with a co-guarantee from its affiliate Assured Guaranty Municipal Corp. (AGM). Assured Guaranty Finance Overseas Ltd. (company number 4031467) (AGFOL), which is authorised and regulated by the Financial Conduct Authority, has permission to arrange contracts of insurance including financial guarantees for its affiliate AGM. AGFOL has approved this press release.

Cautionary Statement Regarding Forward-Looking Statements:

Any forward-looking statements made in this press release reflect the current views of Assured Guaranty Ltd. (together with its subsidiaries, the Company) with respect to future events and are made pursuant to the safe harbour 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 resulting from the Company’s inability to execute its strategies; the demand for its financial guarantees; further actions that the rating agencies may take with respect to the Company’s financial strength ratings; adverse developments in the Company’s guaranteed portfolio; the ability of the Company to negotiate mutually satisfactory transaction terms with other transaction parties; 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 the Company’s filings with the U.S. Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which are made as of 24 March 2014.
The Company 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.

Through its subsidiaries, the Company is the leading provider of financial guarantees for principal and interest payments due on municipal, public infrastructure and structured financings. Its subsidiary AGM guarantees international infrastructure and U.S.

municipal bonds, and was previously named Financial Security Assurance Inc. (FSA) before becoming an Assured Guaranty company in July 2009.

Assured Guaranty (Europe) Ltd., a subsidiary of AGM, is the Company’s European operating platform.

Assured Guaranty (Europe) Ltd. (company number 2510099) is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

Assured Guaranty Ltd. is a publicly traded (NYSE: AGO), Bermuda-based holding company. More information on the Company and its subsidiaries can be found at : .. .

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Assured GuarantyUK media contactInstinctif PartnersMark

Lunn, +44 (0) 207 457 2020Mobile: +44 (0)7775 992 309

Hossam Abdel-Kader
Phone: +43 1 9582319

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