Puerto Rico GO bondholders issue proposal for restructuring

Avante

06/04/2016 24:13

SAN JUAN, April 5 (Reuters) - Bondholders with nearly a 
third of Puerto Rico's $17 billion outstanding General 
Obligation bonds on Tuesday unveiled a proposal for a debt 
restructuring they claim would help the island avoid outright 
default. 
    Burdened by an overall $70 billion debt load the government 
says it cannot pay and a 45 percent poverty rate that has led to 
a steady exodus of its American citizens back to the mainland, 
Puerto Rico faces economic collapse without a solution that 
either changes laws and/or involves an agreement with creditors. 
    The bondholders, representing $5 billion of GO debt say they 
would defer principal repayments on their bonds through June 
2020. The proposal was issued by an ad hoc group of GO 
bondholders, including mutual funds and others, represented by 
the law firm Paul Weiss Rifkind Wharton & Garrison. 
    "This exchange would save the Commonwealth $1.9 billion in 
debt service payments over the next five years," according to 
the document. 
    These bondholders earlier criticized legislation being 
rushed through Puerto Rico's Senate and House on Tuesday that 
would halt bond payments ahead of a $422 million debt bill owed 
by the Government Development Bank due May 1. 
    The Senate approved the controversial legislation in the wee 
hours of Tuesday morning while the House continues its debate. 
It is expected to vote before the day is done. 
    "While we would like to negotiate with the Puerto Rican 
Government in private and in good faith, the debt moratorium it 
has proposed that is before the Puerto Rican legislature has 
prompted this public release," Andrew Rosenberg, a lawyer with 
Paul, Weiss said in a statement accompanying the proposal. 
    GO debt is backed by the full faith and credit of the 
government and is typically the senior debt paid before all 
others. 
    In addition, the creditors said they would buy approximately 
$750 million in new debt at a 7 percent annual coupon and no 
principal repayments until 2020. 
    "The combination of principal deferment plus $750 million in 
new funds will help to avoid a July 1 default," the creditors 
said.  urn:newsml:reuters.com:*:nL2N17810Z 
 
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Puerto Rico bondholders critical of government debt moratorium 
bill     urn:newsml:reuters.com:*:nL2N17810Z 
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 (Reporting By Nick Brown in San Juan; Writing by Daniel Bases; 
Editing by Bernard Orr) 
 ((daniel.bases@thomsonreuters.com; +1 646 223 6131; Reuters 
Messaging: daniel.bases.reuters.com@reuters.net; Twitter: 
@djbases)) 
 
Keywords: PUERTORICO DEBT/PROPOSAL