Wednesday, November 22, 2017

Puerto Rico GO ad hoc group discloses debt held by members

By on July 13, 2017

San Juan – One of Puerto Rico’s main creditor groups, the Ad Hoc Group of General Obligation (GO) Bondholders, has disclosed the amount of commonwealth debt held by each of its seven current members, which are mostly hedge funds.

According to a document filed in court Thursday as part of the island’s bankruptcy under Title III of the federal Promesa law, as of July 12 the ad hoc group together held about $2.9 billion in Puerto Rico bonds, mostly in GOs. The payment of GO debt, which amounts to $13.2 billion, is backed by the commonwealth’s full faith and credit under its Constitution.

The group currently comprises Aurelius Capital Management, Autonomy Capital, FCO Advisors, Franklin Mutual Advisors, Monarch Alternative Capital, Senator Investment Group and Stone Lion.

The list is led by Autonomy, which owns $937.5 million in GO debt, followed by Monarch, with $585.1 million in GO bonds, of which $35.9 million is insured. The firm also has $21.5 million in Highways & Transportation Authority (HTA) bonds.

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As for Aurelius, it owns about $470.9 million in GO bonds, with roughly $4.6 million insured. The hedge fund with offices in New York—and known for its role in Argentina’s debt crisis—also holds about $2.5 million in HTA debt. Moreover, Stone Lion owns $310 million in GOs, of which $2.8 million is insured, as well as $15 million in HTA bonds.

In the case of FCO Advisors, the firm holds almost $422 million in general obligations, with $2.9 million insured. It should be noted that FCO also owns approximately $10.15 million in junior Sales Tax Financing Corp. (Cofina) bonds. Certain creditors of the sales tax-backed debt are engaged in a legal dispute with GO bondholders, who claim that the pledged sales tax money belongs to the commonwealth, and thus must be available for the payment of GO debt.

Finally, Senator and Franklin Mutual Advisors have $254.7 million and $294 million in GO bonds, respectively.

Additional holders of General Obligation Bonds may become members of the Ad Hoc Group of General Obligation Bondholders, and certain members of the Ad Hoc Group of General Obligation Bondholders may cease to be members in the future,” warns the document filed by law firms Paul Weiss and Robbins Russell. Local law firm Jiménez, Graffam & Lausell also represents the ad hoc group.

The disclosure comes a day after the first mediation session between the government and its main creditor groups, as ordered by federal Judge Laura Taylor Swain.

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