Primus Completes Portfolio Repositioning Transaction That Further Reduces Its Bespoke Tranche Exposure
February 12, 2010
Hamilton, Bermuda – February 12, 2010 – Primus Guaranty, Ltd. (NYSE:PRS) announced that its subsidiary, Primus Financial Products, LLC (“Primus Financial”), has completed a portfolio repositioning transaction with a significant counterparty. In the transaction, Primus Financial terminated $300 million notional principal of three bespoke tranche transactions and paid the counterparty a termination fee of $35 million, a significant discount to the market value of the these transactions.
Since July 31, 2009, Primus Financial has completed four repositioning transactions, resulting in the termination of approximately $2.8 billion of single-name credit swaps and tranche transactions. In aggregate, Primus Financial has paid $66.5 million to terminate or amend credit swaps. Primus Financial has also contributed $126 million of capital to two subsidiaries in connection with the portfolio repositioning transactions, which has enabled Primus Financial to cap its exposure to an additional $2.9 billion of credit swaps. The objective of these portfolio repositioning transactions is to de-risk components of Primus Financial’s credit swap portfolio by actively managing certain industry concentrations and higher risk tranches with the objective of narrowing the range of possible negative outcomes and preserve the portfolio’s long-term value.
No assurance can be given that these portfolio repositioning transactions, in aggregate, will achieve the desired risk reductions in Primus Financial’s portfolio.