The Puerto Rico Aqueduct & Sewer Authority wants to issue the debt through a new agency to finance construction work delayed by the government’s fiscal crisis, Bloomberg News reported yesterday. Though the commonwealth just defaulted on about $1 billion due to bondholders, the agency would give investors first claim on revenue it collects from water and sewer bills, according to Efrain Acosta, the director of finance for the utility. It may also exchange an additional $1.1 billion of securities for its outstanding bonds to investors willing to accept less than they’re owed. “The market is tough at this moment,” Acosta said in an interview. “But we have to go forward with our plan and see if we can get new money to pay our contractors and try to restart our construction plan.” Puerto Rico faces considerable obstacles, even in a market where rock-bottom yields have left buyers willing to take on more risk for bigger returns. The U.S. territory hasn’t sold bonds since it borrowed $3.5 billion in March 2014, a deal that was supposed to give it time to arrest the financial decline, and a planned $750 million offering by the water utility last year was subsequently shelved. Moreover, it’s unclear how a federal oversight board, which hasn’t been appointed yet, will treat bondholders as the island seeks to cut its debt. Read more.
For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage.
