Puerto Rico’s government-run electric utility resurrected a deal with creditors willing to lend it $111 million, a sign of slow-moving progress in the island’s first negotiated agreement to cut some of its $70 billion of debt, Bloomberg reported on Friday. The Puerto Rico Electric Power Authority’s creditors will provide $55 million to the utility as a first installment of a $111 million bond. The parties are working to finalize the sale of the remaining $55 million in securities. PREPA had been negotiating since last week, when the debt-sale agreement between bondholders, MBIA Inc. and Assured Guaranty Ltd. lapsed. Creditors were reluctant to lend because Gov. Alejandro Garcia Padilla signed a debt-moratorium law on April 6 that allows him to suspend principal and interest payments. This week, Puerto Rico’s Senate alleviated the concerns by passing legislation exempting the new bonds from the moratorium law. The move follows an agreement between President Barack Obama’s administration and Republicans in Congress on Thursday over legislation, known as PROMESA, that would create a new financial control board to manage a debt restructuring, as well as to oversee the island’s finances. The bill also protects any existing, voluntary restructuring agreements between a commonwealth agency and its creditors, like the PREPA plan.
