Assured Guaranty Restructures PREPA Debt: What It Means

Assured Guaranty Ltd.

and the Puerto Rico Electric Power Authority (PREPA) announced on Monday, that they have entered into an agreement to restructure PREPA debt. The announcement follows the recent media reports from last week that a restructuring was agreed to. Shares of Assured Guaranty are rallying, rising 3.71 percent this past week. The company's stock is up 2.78 percent for the last 4 weeks. With the restructuring support agreement (RSA), PREPA will now be able to meet its January 1 interest payment. Prepa is one of the 13 branches of the Puerto Rican government that is scheduled to make bond payments for a total of nearly $902 million. Macquarie Research maintains its long-term Outperform rating outlook on Assured Guaranty. "AGO will not have to take a haircut as part of the restructuring agreement, and should be able to release reserves that have been set aside for PREPA. However, AGO may have to strengthen reserves for other Puerto Rico credits elsewhere so the exact income statement and balance sheet impact is uncertain at this time," the brokerage firm noted in a statement released Monday. The brokerage firm raised its 12-month price target from $32 per share to $33 per share. In the past week, AGO shares has outperformed the S&P 500 by 0.92 percent and its outperformance has been increasing to 4.23 percent for the last 4 weeks. Assured Guaranty's 50-day moving average is $26.55 and its 200 day moving average is currently at $26.23. Assured Guaranty's shares have rallied 3.79 percent in the past 52 Weeks.