Dominic Nathan, European head of Assured Guaranty’s European operations, told Infrastructure Investor that he sees the monoline insurer as part of a group of four or five solutions that will provide infrastructure investors with access to the capital markets going forward.
“I see our role as an important part – but only a part – of the overall debt solution,” stresses Nathan. “What I don’t see is just one weighty solution going forward, as the monolines were in the pre-crisis era. I just don’t see one idea big enough to do what’s required,” he said, elaborating:
“The way I see it is a number of solutions running alongside each other and providing capacity to the market. So, I think you’ll see Assured Guaranty wrap bonds, I hope Hadrian’s Wall [one of the first infrastructure debt funds] is successful and the European Investment Bank is successful. I think you’ll see all of these solutions coming along and competing on a deal basis. I see a world of four or five competing, but different, solutions that will be the facilitators of the capital markets, rather than just one.”
Fresh from the success of its recent UK comeback deal – which saw Assured Guaranty replace fellow monoline Ambac as guarantor for a £97.2 million (€117 million; $154 million) hospital PFI bond maturing in 2030 – Nathan explained Assured Guaranty will leverage its AA-rating to replace bonds on several other projects and wrap new transactions. PFI, short for Private Finance Initiative, is the UK’s standardised procurement process for public-private partnerships.
“Our capacity constraint is really on a per deal basis,”Nathan said. “On a replacement deal like Worcestershire [Assured Guaranty’s comeback deal], we can probably do up to £500 million per deal – which incorporates most of the market, but not all of it. On new deals, it’s probably slightly less, maybe up to £350 million. That’s the constraint on a deal basis – we don't expect to be constrained by country or sector limits,” he explained, adding:
“There are formal limits for us, but currently we have more capacity than there are [infrastructure] deals to insure.”