The Puerto Rico Electric Power Authority, the island’s main electricity provider, has entered into a debt-exchange agreement with some of its bondholders and hedge funds that puts the utility a step closer to reducing its $8.3 billion debt load, Bloomberg News reported yesterday. The accord wraps up a preliminary pact unveiled in September that calls for investors to take losses of as much as 15 percent in the transaction, according to a statement Thursday from the utility, known as PREPA. The pact stipulates that legislation authorizing the debt restructuring that was introduced this week must be passed in November and that the exchange must be executed by June 30, 2016, according to a statement from the bondholder group. Hedge funds and municipal mutual funds holding about 35 percent of the agency’s bonds, fuel-line lenders and the Government Development Bank, which lends to the island’s agencies, signed on to the final pact. The agreement doesn’t include bond-insurance companies MBIA Inc., Assured Guaranty Ltd. and Syncora Guarantee Inc., which guarantee about $2.5 billion of the utility debt against default. Read more.
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