Puerto Rico says it owns $400 million in cash being held by a bondholder trustee, raising an issue at the heart of the territory’s $74 billion bankruptcy, Bloomberg News reported yesterday. By making the claim in court papers on Tuesday, lawyers for the commonwealth’s sales-tax agency, known as Cofina, boosted the stakes for bondholders who have been fighting among themselves over how to divide $16 million in interest due on June 1. Any interest payments would come from the $400 million to which Puerto Rico is now laying claim. “This is unusual,” said Daniel Solender, head of municipals at Lord Abbett & Co., which manages $19 billion of state and local debt, including senior and junior Cofinas. “There is a pool of money there, so everyone’s going to try to claim it.” Next week, U.S. District Judge Laura Taylor Swain is scheduled to decide whether the interest should be paid or held in trust with the rest of the cash while Puerto Rico’s bankruptcy case moves forward.
