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One of Puerto Rico’s most essential utilities company has returned to the capital markets for the first time in eight years, the Associated Press reported. The comeback took place on Thursday after government officials in the U.S. territory announced the issuance of $1.4 billion worth of bonds. Officials said they refinanced bonds initially issued by the island’s Water and Sewer Authority in 2008. The move comes as part of an effort by the Puerto Rican government to restructure a portion of its more than $70 billion public debt. "This is excellent and hopeful news for the Water and Sewer Authority and for Puerto Rico. Our government has worked hard so that the public corporation returns to the markets as part of Puerto Rico's economic recovery, and today it is a reality," Gov. Wanda Vázquez said. Doriel Pagán Crespo, president of the Water and Sewer Authority, said officials expect to achieve an estimated $13 million in annual savings in debt service, in order to reduce the state-owned company’s operational deficits or finance capital improvement projects. In 2015, Puerto Rico’s government declared it was unable to pay its public debt. Two years later, the U.S. territory filed for the biggest municipal bankruptcy in history.

The U.S. Supreme Court on Friday agreed to hear Goldman Sachs Group Inc.’s appeal in a securities fraud case that could redefine the ability of shareholders to pursue class actions against public companies whose stock prices fall, Reuters reported. Goldman is appealing an April decision from the 2nd U.S. Circuit Court of Appeals in Manhattan allowing a class action accusing the bank of hiding conflicts of interest when creating risky subprime securities before the 2008 financial crisis. A decision is likely before the end of the court’s current term in June. The case stemmed from Goldman’s sale of collateralized debt obligations including Abacus 2007 AC-1, which it assembled with help from hedge fund manager John Paulson. In 2010, Goldman reached a $550 million settlement with the U.S. Securities and Exchange Commission to resolve charges it cheated Abacus investors by concealing Paulson’s role, including how he made a $1 billion profit by betting the CDO would fail. Shareholders led by three pension plans claimed that before the news came out, the bank had misled them and inflated its stock price with such statements that client interests “always come first” and that “integrity and honesty” mattered.

Economic indicators are pointing to a second wave of bankruptcy for businesses of all sizes as well as households, likely to hit in the second half of next year, according to Ed Altman, the finance professor and bankruptcy guru, WSJ Pro Bankruptcy reported.A number of signs suggest a coming surge in defaults for nonfinancial companies, which picked up with the onset of the COVID-19 pandemic but have been somewhat muted thanks to unprecedented support for financial markets from the Federal Reserve. Chief among the indicators pointing to another bankruptcy wave ahead is the ratio of nonfinancial corporate debt to gross domestic product, which spiked to an all-time high of close to 57 percent in the first half of 2020, Altman said. Between 1985 and January 2020 that ratio never climbed above 47 percent, according to data presented by Mr. Altman, a professor at New York University’s Stern School of Business. “Every time we had a spike in the ratio of nonfinancial corporate debt to GDP, we also had a spike in default rates within 12 months to crisis levels,” he said. Corporate default rates followed that pattern in the past four recessions, including those that occurred in 2008-2009 and 2000-2001. Crisis-level default rates are around 8 percent to 10 percent or more, according to Altman, known for inventing the so-called Z-score, a mathematical formula used to predict corporate bankruptcies. Altman forecast that default rates for nonfinancial companies will reach 7.5 percent by the end of 2021 from less than 6 percent currently. That compares with 2.7 percent at the end of 2019 and the historical average for corporate defaults of 3.3 percent.

AMC Entertainment Holdings Inc., the world’s largest movie theater chain, has launched efforts to sell more than $700 million worth of stock while warning that failing to raise enough liquidity might force the company into bankruptcy, WSJ Pro Bankruptcy reported. The equity sale could help AMC avoid a debt default, if the company can generate enough dollars to last it until widespread vaccination against COVID-19 helps bring moviegoers back into theaters, AMC Chief Executive Adam Aron said yesterday. If AMC can’t obtain the liquidity needed to stay afloat until movie attendance gets back to normal, the company would likely need to restructure its balance sheet, potentially causing a “total loss” of stockholders’ investment, according to a securities filing Thursday. Equity ranks below debt in priority and often gets wiped out in a bankruptcy restructuring. AMC is aiming to sell up to 200 million shares, or more than $700 million, based on the $3.58 stock price yesterday. The company previously proposed stock sales in September and November, filing two separate shelf registrations to sell 30 million and 20 million shares, respectively. Despite reopening the bulk of the company’s more than 1,000 cinemas world-wide, AMC is burning cash as capacity restrictions limit movie attendance and major Hollywood theaters delay big-ticket flicks or, increasingly, send them straight to streaming. AT&T Inc.’s Warner Bros. studio pushed back the release of “Wonder Woman 1984” until Christmas, while MGM Holdings Inc. has delayed the release of “No Time to Die,” a James Bond film, to April 2021.

Buyers and managers of collateralized loan obligations are seeking to overcome the roadblocks that can immobilize them in distressed situations that also draw opportunistic hedge funds, Bloomberg reported. Hildene Capital Management, a structured-finance investor that oversees more than $12 billion, is establishing special purpose vehicles alongside CLOs that can buy new workout loans and equity stakes in troubled holdings. The goal is to profit from the rescue financing while splitting any additional recovery with its CLO partners. Separately, some collateral managers are turning to amendments that allow them to take in fresh cash from either equity holders or third-party investors to acquire restructured assets. The $860 billion global CLO market is racing to find ways to give managers more flexibility in distressed situations as safeguards intended to protect buyers in the top-rated parts of the structures limit managers’ options in high-stakes restructuring brawls. CLOs typically need to get consent from most or all investors before eliminating those protections, which often isn’t feasible.

Dealmakers said that Joe Biden’s projected win of the U.S. presidency and the Republican Party potentially retaining control of the U.S. Senate could drive a pickup in mergers and acquisitions (M&A) that took a hit amid the COVID-19 pandemic, Reuters reported. Bankers and lawyers who advise companies on M&A said the outcome, if confirmed, was the best possible for providing the stable economic and regulatory environment that dealmaking needs. They expect that Biden, the Democratic Party candidate, would be more predictable in governing than Republican President Donald Trump, and that a Republican-controlled U.S. Senate would restrain Biden’s most interventionist policies. "This dynamic can be quite conducive to doing deals, because it provides stability," said Peter Orszag, who served in the White House under President Barack Obama and now heads the financial advisory arm of investment bank Lazard Ltd. “The only caveat is that there is less chance of another big round of stimulus, which would help the macroeconomic outlook, than if Democrats had taken the Senate,” Orszag added. All major U.S. TV networks projected Biden would win the presidency on Saturday, though Trump vowed to continue to challenge the outcome in the courts. Two runoff U.S. Senate races in Georgia, which will decide which party will control the upper chamber of Congress, will take place on Jan. 5, with Republicans favored to retain control based on this week’s tally.