£170 million DSR Guarantee for Yorkshire Water Services Limited
Assured Guaranty UK Limited (AGUK)* announced that it has issued a £170 million, five-year debt service reserve (DSR) guarantee to benefit Yorkshire Water Services Limited, a member of the Yorkshire Water group. The DSR guarantee provided by AGUK, who are rated AA by S&P Global Ratings and A1 by Moody’s Investors Service, will replace the existing liquidity facility provided by banks within the Yorkshire Water group’s securitisation structure.
AGUK’s DSR guarantee was structured to fit within Yorkshire Water Services Limited’s existing securitisation documents and covers certain senior payment obligations due to bondholders and other senior creditors.
AGUK is a subsidiary of Assured Guaranty Ltd. (together with its subsidiaries, Assured Guaranty), 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, Assured Guaranty provides guarantees for other debt service obligations of borrowers across the infrastructure and utilities sectors.
Dominic Nathan, Senior Managing Director, AGUK, commented:
“Our Debt Service Reserve guarantee provides a cost-effective and competitive alternative to bank facilities for large UK water and sewerage companies. As this transaction demonstrates, it fits well within an established whole business securitisation structure. We are delighted to have provided this product to Yorkshire Water and expect that other companies will also see the benefits of this type of financial guarantee from Assured Guaranty. Our strong credit standing and proven stability over more than three decades are reasons to be confident the DSR guarantee will be available for the long term without having to be renewed annually in the bank market.”
David Gregg, Head of Corporate Finance, Yorkshire Water, commented:
“Yorkshire Water welcomed the opportunity to work with Assured Guaranty on the debt service reserve guarantee to be able to ensure an appropriate fit with our existing financing terms. The successful outcome reflects a collaborative approach providing a longer-term solution to meet DSR requirements that is beneficial to the group and in the best interests of Yorkshire Water’s customers.”
Yorkshire Water is the fifth largest water and sewerage company in the UK both in terms of regulatory capital value and customers served. It provides its services to approximately 2 million households and 140,000 business premises in northern England.
Assured Guaranty’s advisers on the transaction were Allen & Overy LLP. Yorkshire Water were advised by Centrus and Linklaters LLP.
All of the securities have been sold, and this announcement is for information purposes only. This announcement does not constitute an offer to sell or the solicitation of an offer to buy any securities.
The securities described herein have not been and will not be registered under the United States Securities Act of 1933, as amended ("Securities Act"), or with any securities regulatory authority of any state or jurisdiction of the United States, and may not be offered, sold or transferred, directly or indirectly, in the United States absent registration under the Securities Act or an available exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the securities laws of any state or other jurisdiction of the United States.
* AGUK (company number 2510099) is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. AGUK provides its financial guarantee together with a co-guarantee from its affiliate Assured Guaranty Municipal Corp. (AGM). Both AGUK and AGM are subsidiaries of Assured Guaranty Ltd. (AGL and, together with its subsidiaries, Assured Guaranty). Through its subsidiaries, Assured Guaranty provides credit enhancement products to the U.S. and international public finance, infrastructure and structured finance markets, and also provides asset management services. AGL is a publicly traded (NYSE: AGO), Bermuda-based holding company. More information on AGL and its subsidiaries can be found at AssuredGuaranty.com.
Cautionary Statement Regarding Forward-Looking Statements:
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 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 Assured Guaranty’s inability to execute its strategies; the demand for Assured Guaranty’s financial guarantees, including DSR guarantees; the continued availability of the DSR guarantee; the relative merits of DSR guarantees and bank facilities for whole business securitisation structures; actions that the rating agencies may take with respect to Assured Guaranty’s financial strength ratings; adverse developments in Assured Guaranty’s guaranteed portfolio; 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 AGL’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 28 March 2022. 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.