Puerto Rico’s main electricity provider extended an agreement with some bondholders to Nov. 20, giving the utility more time to negotiate with insurers that guarantee a portion of its debt against default, Bloomberg News reported on Friday. The Puerto Rico Electric Power Authority (PREPA) is trying to restructure $8.2 billion of debt to reduce its costs and free up cash for plant upgrades. Investors holding about 35 percent of its debt on Nov. 5 agreed to take losses of as much as 15 percent by exchanging their bonds for new securities. The deal was set to lapse Thursday if PREPA couldn’t win the support from companies that insure about $2.5 billion of the utility’s debt. The new deadline is Nov. 20, PREPA said in a statement. Read more.
In related news, New York City’s $53 billion civil-employees’ pension is urging its hedge funds and distressed debt managers that hold Puerto Rico bonds to “find a just and equitable solution” to the commonwealth’s debt crisis, Bloomberg News reported on Friday. The New York City Employees’ Retirement System has assets managed by at least eight money managers that own pieces of the island’s $70 billion debt. As prices of Puerto Rico bonds plummeted and yields soared, hedge fund and distressed-debt buyers swooped in. They now hold as much as 30 percent of Puerto Rico’s securities, according to Barclays Plc. “Some hedge fund and other institutional investors’ reaction to the crisis suggests they will seek to impose draconian terms and conditions on Puerto Rico’s bond issuing entities,” according to a letter sent by the trustees of the New York City Employees’ Retirement System, one of the city’s five pension funds. Read more.
For news and analysis of Puerto Rico’s debt crisis, be sure to visit ABI’s “Puerto Rico in Distress webpage.
