Assured Guaranty Responds to Puerto Rico’s Latest Revised Fiscal Plans
March 28 2018 - 4:57PM
Business Wire
Newest Plan Now Projects $6 Billion
Surplus
Dominic Frederico, President and CEO of Assured Guaranty Ltd.
(NYSE:AGO)(together with its subsidiaries, Assured Guaranty),
released the following statement in response to the latest revised
fiscal plans submitted by the government of Puerto Rico, Puerto
Rico Electric Power Authority (PREPA) and the Puerto Rico Aqueduct
and Sewer Authority (PRASA) by the Financial Oversight and
Management Board for Puerto Rico (Oversight Board):
Each successive proposed fiscal plan reveals
what many informed observers already suspected, that Puerto Rico
had greater financial resources than it previously claimed.
Nevertheless, there continues to be little transparency in the
process, and audited financial statements still have not been
produced since 2014. The most recent draft fiscal plan, the third
this year, now projects $6 billion available for creditors in the
first six years, when just two months ago the Commonwealth claimed
to be facing a deficit exceeding $3 billion before paying any debt
service, a swing of almost $10 billion. Every new fiscal plan
paints a different picture, but they each continue to demonstrate a
failure to comply with applicable law including the requirements of
PROMESA, an unwillingness to repay debt obligations, a lack of
recognition of the importance of capital market access for future
economic growth, and the allocation of hundreds of millions of
dollars to unnecessary litigation expenses – expenses that could be
avoided by working together with creditors and other stakeholders
to develop a realistic plan for Puerto Rico’s future. Based on the
revised plan and further opportunities for revenue and expense
improvements, a consensual agreement can be negotiated without
delay and significant litigation expense.
Against this backdrop, the Governor recently
made the unprecedented suggestion to both increase public sector
salaries and cut taxes, thus deepening the financial hole even
while the Commonwealth sits in Title III proceedings, essentially
bankruptcy. The Governor and Oversight Board must do a better job
for Puerto Ricans whose lives and livelihoods depend on the
recovery, and for investors that provided funds to build the
island’s schools, airports, hospitals, and infrastructure. The
Commonwealth and Oversight Board must develop a process to prohibit
wasteful and fraudulent spending, and to eliminate the budget
deficits that have plagued the island’s recent past. As past
municipal bankruptcies have shown, working closely with creditors
on consensual approaches and tapping their expertise to help
navigate complicated debt restructurings is the optimal path to
emerge successfully from bankruptcy.
It is critical that debtors respect their
creditors. If Puerto Rico does not pay its debts, as required by
its own constitution, future investment in the island will dry up.
Without investment, there can be no economic recovery or long-term
expansion. This is a lesson that has clearly not been reflected in
Puerto Rico’s actions.
Moreover, a failure to comply with applicable
law and to respect property rights in Puerto Rico would also have
harmful ripple effects across the mainland financial markets.
Violating bond agreements could prevent other municipal issuers
from accessing capital markets at reasonable rates. This would make
it more expensive for municipalities throughout the United States
to fund essential services and infrastructure. We urge the Governor
and Oversight Board to work with creditors to create a sustainable
economic recovery plan based not on political agendas but on the
Oversight Board’s only mandate: to support economic stability in
Puerto Rico by achieving fiscal responsibility and access to
capital markets.
Any forward-looking statements made in this press release
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
resulting from implementation or non-implementation of any
Commonwealth fiscal plan; failure to reach a consensual settlement
among creditors, the Commonwealth, the Oversight Board and other
stakeholders; 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 March 28, 2018.
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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version on businesswire.com: https://www.businesswire.com/news/home/20180328006160/en/
Assured Guaranty Ltd.Robert Tucker, 212-339-0861Senior Managing
Director, Investor Relations and Corporate
Communicationsrtucker@agltd.comorMedia:Ashweeta Durani,
212-408-6042Vice President, Corporate
Communicationsadurani@agltd.com
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