Primus Guaranty, Ltd. (NYSE:PRS) today commented on Standard & Poor's
Rating Services ("S&P”)
placement of Primus Financial Products, LLC ("Primus
Financial”) on negative watch.
As of September 25, 2008, Primus Financial had approximately $820
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. A downgrade of Primus Financial’s
triple-A rating does not trigger a credit event, or require Primus
Financial to post collateral or allow a counterparty to terminate its
credit default swap transactions with Primus Financial.
Additionally, in anticipation of Washington Mutual Inc. ("Washington
Mutual”) filing for bankruptcy, the company
provided the following information with regards to the credit default
swaps ("CDS”)
portfolio of Primus Financial.
As of September 25, 2008, Primus Financial’s
net single-name CDS notional exposure that references Washington Mutual
totaled $16.1 million. The company anticipates that, as a result of a
Washington Mutual bankruptcy credit event, it will have to make cash
settlement payments to its counterparties on these transactions, less
recoveries. Primus Financial also has CDS exposure to Washington Mutual
in its bespoke tranche portfolios, which are not subject to first loss
due to existing subordination levels. The company does not anticipate
that Primus Financial will have to make cash settlement payments on its
bespoke tranche transactions as a result of a Washington Mutual credit
event. However, the capital requirements associated with each tranche
will increase as a result of a reduction in tranche subordination.
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 offers protection against the risk of default on corporate,
sovereign and asset-backed security obligations through the sale of
credit swaps to dealers and banks. As a swap counterparty, Primus
Financial Products is rated Aaa by Moody's Investors Service, Inc. and
AAA by Standard & Poor's Rating Services. 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.
