Primus Guaranty, Ltd. (NYSE:PRS) today announced that two asset-backed
securities, referenced by credit default swaps (“CDS”)
written by Primus Financial Products, LLC (“Primus
Financial”), were downgraded below Caa2 by
Moody’s Investors Service (“Moody’s”).
The notional principal on these CDS with current counterparties is $10
million. Under the terms of the ISDA master agreement governing CDS on
asset-backed securities, a downgrade of the underlying security to CCC
(Standard & Poor’s) or Caa2 (Moody’s),
or below, is considered a credit event.
Primus Financial will make a provision for the credit event in the third
quarter. In accordance with the ISDA master agreement, until the
referenced asset-backed security is presented to the company, the credit
swaps remain outstanding and premiums are required to be paid by the
counterparty. Primus Financial does not expect any immediate capital
impact.
As of October 15, 2008, Primus Financial had approximately $805 million
in cash and liquid investments to meet any counterparty claims. Primus
Financial’s $300 million of debt and
preferred securities is long-term or perpetual capital, with the first
maturity occurring in 2021.
About Primus Guaranty
Primus Guaranty, Ltd. is a Bermuda company, with its principal operating
subsidiaries, Primus Financial Products, LLC and Primus Asset
Management, Inc., headquartered in New York City. Primus Financial
Products provides protection against the risk of default on corporate,
sovereign and asset-backed security obligations through the sale of
credit swaps to dealers and banks. Primus Asset Management provides
credit portfolio management services to Primus Financial Products, and
manages private investment vehicles, including two collateralized loan
obligations and three synthetic collateralized swap obligations for
third parties.
Safe Harbor Statement
Some of the statements included in this press release and other
statements Primus Guaranty may make, particularly those anticipating
future financial performance, business prospects, growth and operating
strategies, market performance, valuations and similar matters, are
forward-looking statements that involve a number of assumptions, risks
and uncertainties, which change over time. For those statements, Primus
Guaranty claims the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of
1995. Any such statements speak only as of the date they are made, and
Primus Guaranty assumes no duty to, and does not undertake to, update
any forward-looking statements. Actual results could differ materially
from those anticipated in forward-looking statements, and future results
could differ materially from historical performance. For a discussion of
the factors that could affect the company's actual results please refer
to the risk factors identified from time to time in the company's SEC
reports, including, but not limited to, Primus Guaranty's Annual Report
on Form 10-K, as filed with the U.S. Securities and Exchange Commission.
Media:
Kennedy & Company
Steven Kennedy,
914-961-2436 ext. 13
steven@kennedycom.com
or
Investor
Relations:
Primus Guaranty, Ltd.
Nicole Stansell,
212-697-1992
investorrelations@primusguaranty.com
