Puerto Rico’s financial oversight board is considering slashing — by about half — the amount of new bonds it claims the island’s bankrupt power utility can repay, a potential offering that bondholders will most likely reject, Bloomberg News reported. The federally appointed board calculates that Puerto Rico’s Electric Power Authority, called Prepa, can only repay $2.5 billion to its creditors, less than half the $5.68 billion offered in its March debt-restructuring plan. It’s far below the $10 billion it owes, including nearly $9 billion to bondholders and fuel-line lenders. Steeper-than-anticipated declines in energy consumption and rising costs require a larger-than-previously proposed cut to the amount of debt the utility is able to repay over time, the board, which is managing Prepa’s bankruptcy, said in a statement late Friday after it approved the utility’s multi-year fiscal plan. “The guiding principle for all debt restructurings is sustainability,” David Skeel, the board’s chairman, said in the statement. “The goal is to stabilize Prepa. The oversight board has been analyzing carefully and dispassionately how much debt Prepa can pay and made that determination strictly based on the most recent available data.”
