Puerto Rico's government reached a deal on Monday with a bondholder group to restructure more than a third of the debt owed by its troubled power company as the utility moves toward privatization, the Associated Press reported. A federal control board overseeing the U.S. territory's finances called it an "important milestone" and promised the deal would not hit Puerto Ricans with rate increases to cover debt service if there was a drop in power usage. Officials said that bondholders that hold more than $3 billion in debt from Puerto Rico's Electric Power Authority would exchange it for two new bonds. One would be exchanged at 67.5 cents on the dollar, while the other would be exchanged at 10 cents on the dollar and would be linked to Puerto Rico's economic recovery. The bondholder group whose clients include OppenheimerFunds and Knighthead Capital Management said in a statement that addressing the power company's debt can speed up the utility's transformation and viability. Puerto Rico legislators are expected to soon approve several measures that will allow the Puerto Rico's government to privatize the generation of power and award concessions for transmission and distribution.
