Puerto Rico sales-tax-backed bonds rallied after a tentative agreement struck in the island’s bankruptcy promised to steer a large share of that revenue to owners of the securities, leaving them facing smaller losses than investors previously anticipated, Bloomberg News reported. The details of the pact between two court-appointed agents, disclosed in a filing late Thursday, show that owners of the bonds would get just over half of the future sales-tax revenue they’re currently entitled to each year. They would also get all of the $1.2 billion of revenue that’s been frozen in a reserve account until the bankruptcy court decides who has a right to the money. The deal, if ultimately approved, would resolve a key dispute in the island’s record-setting bankruptcy, where creditors have been fighting over who has the highest claim on the government’s tax collections. The arrangement could leave owners of the most senior sales-tax bonds, known as Cofinas, paid in full.
