Thursday, May 25, 2017

Puerto Rico government requests Title III for Cofina

By on May 4, 2017

 

 

 

GDB side 1SAN JUAN – Gov. Ricardo Rosselló confirmed Thursday that he has already asked the fiscal control board to initiate a case under Title III of Promesa for Sales Tax Financing Corp., or Cofina, debt.

The governor explained that before the Title III petition was made Tuesday for the central government, he sent a letter to the board to specifically cover the entity whose debt payments are guaranteed by a portion of sales and use tax (IVU by its Spanish acronym) revenue.

“Regarding Cofina, [Tuesday’s] letter implied Cofina, but we later also sent a letter to include Cofina as one of the credits under Title III,” Rosselló replied to questions from the press.

Chairman José Carrión reportedly said the fiscal board would be initiating a Title III process for this credit. However, as of this writing, the board hasn’t filed the recourse in federal court.

Cofina would then join the government’s general obligation bonds (GOs) and those of the Public Buildings Authority, which, like GOs, have a constitutional repayment guarantee.

The public corporation has more than $17.5 billion in issued bonds that haven’t been paid. These are divided into two classes, senior and subordinate. The latter is the most commonly owned class by local investors.

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