Puerto Rico’s government-owned electricity provider won approval to impose a new surcharge on customers to repay bonds, a key step in the utility’s plan to restructure its $9 billion of debt, Bloomberg News reported yesterday. The island’s energy commission on Tuesday signed off on a 3.10-cent per kilowatt hour charge by the Puerto Rico Electric Power Authority, known as PREPA, according to a statement from the commission. The step is a crucial part of an agreement the utility reached in December, when investors agreed to take a 15 percent loss and suspend principal payments for five years by exchanging their bonds for new securities backed by the charge. PREPA faces other hurdles before it can execute the restructuring deal. The utility is negotiating with bond insurers and investors holding about 35 percent of PREPA’s securities to avoid defaulting on a $420 million principal and interest payment due July 1. Under the pact, the bonds must also carry an investment grade from one of the three major credit-rating companies. Read more.
For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage.
