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The Financial Oversight and Management Board for Puerto Rico, established by the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), yesterday released a request for proposal seeking submissions from interested financial advisors to be retained by the Board. It said that it will consider submissions from financial advisory, business or enterprise consultant, and investment banking firms. Responses to the RFP are due no later than 5:00 p.m. on Friday, December 9. Click here to read the full RFP. 

For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage. 

Puerto Rico’s main electricity provider won’t meet its deadline to issue the new securities needed to restructure its $9 billion of debt, Bloomberg News reported yesterday. It is seeking instead to extend a long-sought resolution with creditors that is viewed as a potential guide for how other Puerto Rico agencies could cut their debt as the government runs out of cash. Under the agreement struck a year ago, the Puerto Rico Electric Power Authority, the largest U.S. public-power provider, has to issue the new debt by mid-December as part of its bond-purchase agreement with creditors, who agreed to take a 15 percent loss by exchanging their bonds for the new securities. The utility, also known as PPREPA, would use a 3.10-cent-per-kilowatt-hour surcharge to back new debt issued as a result of the deal. The $7 to $8 billion transaction now requires approval from the federal oversight board, appointed under a U.S. rescue law known as PROMESA. Javier Quintana Mendez, the utility’s executive director, said to a local newspaper <em>El Nuevo Dia</em> that the new issuance will not proceed this year. Read more.

Puerto Rico’s largest mutual-fund bondholders have broken their silence in an ongoing $30 billion creditor standoff, underscoring tensions between the commonwealth’s traditional municipal investor base and the hedge funds now involved in its financial restructuring, the Wall Street Journal reported today. Funds controlled by fixed-income giants Franklin Advisers and OppenheimerFunds asked a federal judge last week to enter them as defendants in a lawsuit brought by hedge funds holding general obligation, or GO, bonds that have been in default since July. The lawsuit pits those creditors against investors holding $17 billion in competing bonds known as Cofinas for their Spanish acronym and backed by sales tax revenues. If successful, the lawsuit could compromise the Cofina bondholders’ liens and free up a fresh source of repayment for the GO bondholders, which are guaranteed under the Puerto Rican constitution. The courts, on the other hand, could affirm the commonwealth’s longstanding position that the sales-tax revenues are off-limits to the GO bondholders. U.S. District Court Judge Francisco Besosa could also freeze the dispute in the hopes that the warring investor groups will negotiate a settlement, as the Cofina investors have urged. Congress installed a federal oversight board over the summer to take over Puerto Rico’s financial decision-making, but it has yet to announce the hiring of legal and financial advisors with whom creditors will negotiate. The legal status of the Cofina revenues has never been tested in the courts, and resolving it now would take a major question on creditors’ rights out of the board’s hands. Read more. (Subscription required.) 

Don’t miss the “Puerto Rico, ‘Super Chapter 9’ and the Future of Sovereign Debt” session at ABI’s Winter Leadership Conference at Terranea Resort from Dec. 1-3. Register here.

For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage. 

The federal oversight board tasked with pulling Puerto Rico out of a fiscal crisis said the island can’t count on additional aid from Washington, D.C., and should brace for spending cuts and a “significant” reduction of its $70 billion debt to bondholders, Bloomberg News reported on Friday. At a meeting in Puerto Rico on Friday, members of the Financial Oversight and Management Board for Puerto Rico agreed to shoot for having a financial turnaround in place by the end of January. After reviewing Governor Alejandro García Padilla’s proposed plan, board members said that it relies too heavily on federal support. They warned they’ll have to make some tough decisions in the coming months to close Puerto Rico’s chronic budget deficits. Puerto Rico is veering toward the biggest restructuring ever in the $3.8 trillion municipal-bond market after defaulting on a growing share of its debt, which the commonwealth amassed through years of borrowing to pay its bills. Puerto Rico has skipped about $1.8 billion of bond payments since August 2015. Puerto Rico won’t be able to meet its next major round of debt payments in February, according to Conway MacKenzie consultants, which provided an overview of the financial situation of the island. The government faces a budget deficit of as much as $3 billion for the fiscal year that ends in June, according to a financial analysis presented before the board on Friday. Read more.

Don’t miss the “Puerto Rico, ‘Super Chapter 9’ and the Future of Sovereign Debt” session at ABI’s Winter Leadership Conference at Terranea Resort from Dec. 1-3. Register here.

For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage. 

Puerto Rico's treasury secretary on Thursday said the U.S. territory's revenues for fiscal year 2017 are positive, after general fund net revenues for October came in nearly 12 percent higher than expectations, Reuters reported yesterday. Treasury Secretary Juan Zaragoza Gomez said that the October revenues totaled $700.1 million, $74.5 million higher than expectations and $73.4 million higher than October revenues in 2015. Sales tax collections totaled $199.3 million for the month, an $18.3 million increase year-over-year, the secretary said. The struggling island is trying to right its economic ship, facing $70 billion in debt and a 45 percent poverty rate. Its finances are under the oversight of a federal board, which will hold a public meeting today in Fajardo, Puerto Rico. Read more.

For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage. 

The judge hearing all the debt lawsuits in Puerto Rico's federal court ordered continued stays in four more cases, The Bond Buyer reported. U.S. District Court for the District of Puerto Rico Judge Francisco Besosa issued the rulings on Tuesday in the Brigade Leveraged Capital Structures Fund Ltd., National Public Finance Guarantee Corp., Dionisio Trigo-Gonzalez, and U.S. Bank Trust National Association cases. On Nov. 2 the judge had ordered continued stays in the Peaje Investments, Assured Guaranty Corp. and Altair Global Credit Opportunities Fund cases. The Puerto Rico Oversight Management and Economic Stability Act (PROMESA) imposed a stay on litigation until March 1 with a possibility of an extension of 60 or 75 days or to the day the Oversight Board files a petition to commence debt-adjustment proceedings following PROMESA. However, it also allowed exceptions to the stay either "for cause shown" or "to prevent irreparable damage to the interest of an entity in property." Read more. (Subscription required.) 

For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage. 

The federal board tasked with overseeing a major financial overhaul in Puerto Rico has held interviews with a handful of candidates for its counsel from a wide list of applicants, Reuters reported yesterday. The board has interviewed candidates including Chadbourne & Parke LLP, Proskauer Rose LLP, Morrison & Foerster LLP, Sidley Austin LLP and O'Melveny & Myers LLP. A full list of law firms that the board has interviewed could not be immediately determined, and it is possible the board hires a law firm not identified by Reuters. The chosen law firm will advise the board as it seeks to help Puerto Rico right its economic ship after a decade of contraction. The commonwealth is facing $70 billion in bond debt, $45 billion in pension debt and a shrinking population. Created under the federal Puerto Rico rescue law known as PROMESA, the seven-member, bipartisan board will oversee debt restructuring talks with the U.S. territory's bondholders and must sign off on annual budgets. The board last month asked law firms and strategic consultants to submit applications for the job. Read more. 

For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage.