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Assured Guaranty issues debt service reserve guarantee to replace Welsh Water liquidity facilities

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  • Assured Guaranty issues debt service reserve guarantee to replace Welsh Water liquidity facilities

About the entity

Assured Guaranty
Assured Guaranty is the leading provider of financial guaranty insurance. We guarantee scheduled principal and interest payments when due on municipal, public infrastructure and structured financings.
Schneider Electric
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Themes

Assured Guaranty announced that it has issued a £135 million, five-year Debt Service Reserve (DSR) Guarantee to benefit Dwr Cymru (Financing) Limited and Dwr Cymru Cyfyngedig, both companies forming part of the Welsh Water group. The guarantee provided by AGE, who are rated AA by S&P Global Ratings, will replace the existing liquidity facilities provided by banks within the Welsh Water group’s securitisation structure.

AGE’s guarantee was structured to fit within Dwr Cymru (Financing) Limited’s existing securitisation documents and covers certain senior payment obligations due to bondholders and other senior creditors.

AGE, a subsidiary of Assured Guaranty Ltd. (together with its subsidiaries, Assured Guaranty), is the only financial guarantee company currently providing financial guarantees in the UK and European financial markets. In addition to guaranteeing timely payment of principal and interest on bonds, AGE guarantees other debt service obligations of borrowers across the infrastructure and utilities sectors.

Dominic Nathan, Managing Director, AGE, commented: “This Debt Service Reserve Guarantee is the first of its kind provided to a large water and sewerage company in the UK. We are delighted to have provided this product within an established whole business securitisation structure.”

Nick Proud, Chief Executive, AGE, commented: “We expect that, following this transaction, other companies will be interested in this type of financial guarantee, which provides a cost-effective and competitive alternative. The strong credit standing of Assured Guaranty provided Welsh Water with the appropriate level of confidence that this product will be available for the long term without having to renew annually in the bank market. We believe the increased competition in this market will bring significant value creation to the water industry as a whole.”

Welsh Water is the sixth-largest water and sewerage company in England and Wales. It provides its services to approximately 1.4 million households and businesses (around 3.1 million people) and through a network of water pipelines and sewers that stretches for over 63,500 kilometers across Wales and certain adjoining areas of Western England.

Assured Guaranty’s advisers on the transaction were Linklaters and Clifford Chance.