Puerto Rico monitoring agency hits $ 35 billion restructuring agreement with Commonwealth bondholders

A Puerto Rican flag flies over empty pairs of shoes outside the Capitol building in this aerial photograph taken during a protest against the government's reporting of the death spot from Hurricane Maria in San Juan, Puerto Rico, Friday 1. June 2018.

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The Puerto Rico Monitoring Committee's ongoing debt repair history announced late on Sunday that it has agreed with bondholders of around $ 35 billion, which accounts for nearly 50% of the bankruptcy's total bond debt.

The deal, which is within the scope of the adjustment plan, provides more than 60% average haircut for all $ 35 billion, a 36% haircut on general commitment before 201[ads1]2 or "GO" bonds, and a 27% haircut on public authority bonds carrying a constitutional guarantee on payment.

The agreement with supportive creditors "will reduce the amount of Commonwealth-related bonds outstanding to less than $ 12 billion," the Supervisory Board said in a press release. It will also scramble bankruptcy debt service, including principal and interest over the next 30 years , with about half to $ 21 billion from $ 43 billion.

Of the around $ 13 billion of outstanding GO bonds, the bonds issued before 2012 will receive 64 cents on the dollar, while the 2012 and 2014 GOs have a settlement option to receive 45 cents a dollar and 35 cents dollars respectively according to the tire for the proposed deal.

The difference in recoveries derives from a lawful movement the federally designated government made in January when they requested that the judge who monitors the bankruptcy procedure invalidate $ 6 billion The Board of Directors claims that the bonds issued in 2012 and 2014 overturn the terms of Puerto Rico's constitution and therefore are not valid.

If bondholders in 2012 and 2014 decide not to settle the proposed amounts, they have the opportunity to argue for par bond recovery before 2012.

"We have fought hard for the interests of the people of Puerto Rico, and we are delighted to have agreed with creditors who significantly lower Puerto Rico's total debt burden and annual debt payments, "said Natalie Jaresko, CEO of the Supervisory Board. "These were tough negotiations, and we're confident that we reached the best deal possible for Puerto Rico, to move on from decades of debt we couldn't afford."

Puerto Rico first failed its bond loans in July 2016 when it failed to pay approximately $ 1 billion owed to the creditors and has not made any payments since.

"It is a very positive development for Puerto Rico that a cross-section of major bondholders has been working with the Supervisory Board to develop a consensual restructuring agreement that will accelerate the Commonwealth's exit from bankruptcy, respect the legitimate priority of valid public debt, and ultimately help recover. capital market access, "said Susheel Kirpalani, a lawyer from Quinn Emanuel Urquhart & Sullivan who represents bondholders in the legal constitutional debt statement.

This group owns around $ 1.4 billion in constitutionally supported debt and includes the security fund GoldenTree Asset Management, Monarch Alternative Capital, Whitebox Advisors and Taconic Capital, according to government applications.

The agreement, which took about three months of negotiations, is expected to be filed with the court within 30 days with the bondholders who foresee the final approval of the plan by early 2020, according to a source familiar with the settlement agreement.

The Eye Surveillance Authority has made some progress in 2019 after being appointed in 2017 to monitor the turnover of $ 73 billion, which is the largest in the history of the US municipal bond market.

In February, the US District Judge Laura Taylor Swain, who oversees the bankruptcy case, approved an agreement to r estructure for $ 17 billion of tax-backed bonds, known as COFINA for the Spanish acronym. In this agreement, the older bondholders returned 93%, while the younger bondholders received 53%.

In addition, the court also approved the restructuring of around NOK 4 billion for the Government Development Bank's debt.

There is also a preliminary agreement on space for about $ 8 billion in debt issued by the island's convenient electricity authority. And on Wednesday, the Supervisory Board announced a preliminary agreement to restructure more than $ 50 billion in unpaid pension liabilities.

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