Puerto Rico’s Sales Tax Financing Corporation, known as COFINA, yesterday issued $12 billion of new bonds as a federal court-approved deal between the bankrupt U.S. commonwealth and its creditors took effect, according to island officials, Reuters reported. The plan of adjustment approved by U.S. District Court Judge Laura Taylor Swain on Feb. 4 restructures about $17 billion of sales tax-backed debt, leaving senior bondholders to recover 93 percent of their original investment, while junior bondholders recover only 56 percent. The island, which is trying to restructure about $120 billion of debt and pension liabilities through a form of municipal bankruptcy that Swain is overseeing, previously won court approval for a consensual deal with creditors over about $4 billion of debt related to its Government Development Bank (GDB). According to Puerto Rico’s federally created oversight board, the COFINA plan will slash debt service on the sales tax-backed debt by $17.5 billion over nearly 40 years, saving the island an average $456 million annually.
