Bondholders that own nearly $3 billion of debt issued by a Puerto Rico retirement system have a claim on the pension fund’s assets, a U.S. appellate court said yesterday, Reuters reported. The reversal of a district court ruling could complicate efforts by Puerto Rico’s federally created oversight board to restructure about $120 billion of the U.S.
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Puerto Rico’s federal supervisors are making a final push to write down $18 billion in sales-tax bonds under a settlement that would mark their largest renegotiation yet of the U.S. territory’s crushing debts, the Wall Street Journal reported. The restructuring proposal covers the revenue bonds known as Cofina s, which make up roughly 40 percent of Puerto Rico’s core government debt.
Puerto Rico’s plan to slash its sales-tax-backed debt relies on a tax-free exchange of old bonds for new ones. But the partial U.S. government shutdown has thrown a wrinkle in the proceedings, bondholders said in court yesterday: the Internal Revenue Service hasn’t been able to vet it in advance because of the closure, Bloomberg News reported.
Puerto Rico general obligation bond prices tumbled yesterday after the island’s federally appointed oversight board put the squeeze on bondholders late on Monday by announcing a plan to invalidate about half of the U.S. commonwealth’s full faith and credit-backed debt, Reuters reported. The board, along with an unsecured creditors committee, asked the U.S.
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The Financial Oversight and Management Board for Puerto Rico was created under the Puerto Rico Oversight, Management and Economic Stability Act of 2016. The Board consists of seven members appointed by the President of the United States and one ex officio member designated by the Governor of Puerto Rico. Access information on the Board, documents, videos of meetings, calendar of events and live webcasts by clicking here.