Assured Guaranty hopes to take advantage of a recent upgrade in its financial strength rating to resume offering insurance on future flow securitizations.
Speaking on a conference call to discuss first quarter earnings Thusday, company executives said that they see renewed appetite for such insurance 'wraps.'
Assured is currently mandated on two future flow deals.
On March 18, Standard & Poor's upgraded the insurer's financial strength ratings to 'AA-flat' from 'AA-minus,' the highest rating currently assign to any active bond insurer.
“The new S&P rating should expand the available market for our guaranty,” Dominic J. Frederico, chief executive, president, director and member of the executive committee at Assured, said during the call.
Financial future flows include diversified payment rights — linked to future remittance payments processed through emerging market banks — and merchant vouchers, related to purchases made by foreign-issued credit cards in emerging market jurisdictions.
Post-financial crisis, Assured has not been active in wrapping the asset class because of the lack of demand for the product.
Turkey’s Granti Bank is a case in point. In early April, the bank self-led and privately issued a diversified payment rights (DPR) program for $550 million. It was unwrapped. DPRs are linked to electronic money flows from abroad. They are rights to payment orders in dollars, euros or pounds, in which the ultimate beneficiary is a firm or person holding an account at a bank.
About half of the Turkish DPR bonds issued in the last few years have been self-led. Many have also been done privately.