GOs criticize comments by governor’s representative to fiscal board
SAN JUAN – The ad hoc group of general obligation (GO) bondholders criticized the representative of the government of Puerto Rico to the fiscal control board, Elías Sánchez, for “disregarding” the rules of mediation and misinterpreting the Promesa law, following comments he made Tuesday on the negotiation process with certain creditors.
The creditor group wrote Wednesday a letter to former bankruptcy judge, Allan Gropper, who leads the mediation among advisers to the Puerto Rican government, the fiscal board and GO and Cofina creditor groups.
“The governor’s [Ricardo Rosselló] and Mr. Sánchez’s public statements concerning the mediation constitute a blatant violation of the Mediation Agreement,” reads the letter, a copy of which was obtained by Caribbean Business.
“Adds to our concern that the commonwealth views the mediation as an opportunity to advance its public relations and political goals and not to achieve a consensual debt restructuring,” the GO groups adds in its letter to Gropper. The mediation process began late last week in New York City and would last until April 21, Gov. Rosselló said Wednesday when asked by Caribbean Business.
During a forum of the Puerto Rico Chapter of the Business Council of Latin America, which was also attended by Gov. Ricardo Rosselló, Sánchez said there is yet a term sheet on the table with GOs and Sales Tax Financing Corp. (Cofina by its Spanish acronym) creditors. He added that some creditors “have not understood well” the federal law or the fiscal plan.
Andrew Rosenberg, spokesman for the ad hoc group of GOs, stated Wednesday that Sánchez’s “disregard for the rules of the mediation agreement and his distortion of Promesa befits a government getting comfortable in default, not one aspiring to be taken seriously again in the capital markets.”
During Tuesday’s event—which according to La Fortaleza was not open to the press— Sánchez said that some creditors have seen the fiscal plan and the debt restructuring process “as a Chapter 11, and it is something else. They see it in the context of Chapter 9 and it’s not either.”
“Why hasn’t it [the term sheet] been done? Because what has taken place literally is a negotiation phase,” said Sánchez, adding that the administration has given creditors “access to all the information” upon which the certified fiscal plan is based.
Sources consulted by Caribbean Business explained that there are nondisclosure agreements that prevent public comment on the mediation process for a specified time period. Meanwhile, there are certain rules for disclosing financial information that has been shared confidentially during the negotiations. What’s more, creditors who sign these agreements are prevented from trading their bonds until the information shared with them on a confidential basis is disclosed to the market.
“We have worked…with openness, with the availability of having a fiscal plan, discussing the available funds and providing room to listen to proposals,” the governor said Tuesday.
Regarding the process of mediation, Sánchez indicated that “there are many legal-juridical issues, with legal obligations among creditors.” He added that the mediation mechanism provides the opportunity to see “the interaction of the allegations they make and how a judge reacts to them. Likewise with the government.”
Officials from the Rosselló administration have repeatedly stated they are working against the clock to reach out-of-court agreements with the main creditor groups before the stay on litigation under Promesa expires on May 1.