UPDATE 1-Ambac pays out $10.3 million on Puerto Rico default
(Adds analyst commentary in paragraphs 11-13)
By Nick Brown
SAN JUAN Jan 5 (Reuters) - Puerto Rico's latest default meant a $10.3 million hit for Ambac Financial, which insures some of the debt the island's infrastructure authority PRIFA failed to pay on Monday.
Ambac had exposure to $10.3 million of PRIFA debt due on Monday, according to a Nov. 30 company report. An Ambac spokeswoman on Tuesday confirmed the insurer paid the full amount.
PRIFA owed a roughly $36 million payment on Monday but, according to a public filing by the trustee for the PRIFA bonds, failed to transfer funds to make the payment.
The move was expected after Puerto Rico's Governor Alejandro Garcia Padilla announced last week that PRIFA would miss the payment. The strategic defaults are meant to help Puerto Rico combat an ongoing $70 billion debt crisis.
The trustee paid bondholders through a combination of cash on hand and payouts from Ambac, the filing said.
On Tuesday, Standard & Poor's Ratings Services downgraded the PRIFA bonds to 'D', signifying default, from 'CC'.
Ambac insures a face value of more than $500 million of PRIFA debt, according to public filings. In December, Garcia Padilla said he would redirect revenues earmarked to pay debt at PRIFA and other agencies, in order to pay Puerto Rico's public debt, backed by its constitution. Continuación...