A group of holders of Puerto Rican general obligation bonds said it is not ready to support a proposed deal to settle a key dispute in the U.S. territory’s $120 billion bankruptcy, Reuters reported. In a Monday filing in Puerto Rico’s bankruptcy court, the ad hoc group of GO bondholders, whose debt is constitutionally guaranteed, said parts of the proposed settlement “are simply unlawful.” Puerto Rico owes $120 billion in total debt, including about $71.5 billion in bond debt. Its two biggest debt classes — a combined $36 billion or so — are constitutionally-backed GO debt and debt issued by its sales taxing authority, COFINA. GO and COFINA holders have long debated whether the island’s sales tax revenue is property of the island’s commonwealth government — and therefore can be used to pay GO debt — or property of COFINA, which could only be used to repay COFINA bonds.
