Puerto Rico’s governor axed an $8.3 billion debt-restructuring agreement for the U.S. territory’s bankrupt public power utility, reflecting a lack of political support for raising electricity rates to pay off bondholders, WSJ Pro Bankruptcy reported. Gov. Pedro Pierluisi said yesterday that he would terminate a debt-cutting agreement backed by BlackRock Financial Management Inc., Nuveen Asset Management LLC and other creditors of the bankrupt utility, further delaying a restructuring process that began in 2014. Puerto Rico has restructured most of its public debt, but the power utility remains mired in bankruptcy despite coming to terms with most creditors in 2019. The proposed settlement required approval from the legislature to issue new bonds backed by a customer surcharge, an unpopular proposition in Puerto Rico where power costs far more than in the mainland U.S. Top lawmakers have privately rejected such legislation and sought a renegotiation with bondholders. The oversight board supervising Puerto Rico’s finances supports the governor’s decision to terminate the debt agreement, a board spokesman said Tuesday. Bondholders have been pushing for mediated talks to develop an alternative path forward in the event that legislation stalled.
