Assured rejects proposed Puerto Rico utility debt agreement
SAN JUAN – In response to the announcement of an agreement in principle among Puerto Rico’s Financial Oversight and Management Board, government, the Puerto Rico Electric Power Authority (Prepa) and certain Ad Hoc Prepa bondholders, bond insurer Assured Guaranty said it continues to support the restructuring support agreement (RSA) in place before the fiscal board was created.
Assured stressed in a statement posted on its website that the “originally agreed to” RSA was backed by “PREPA, its creditors, two successive Commonwealth administrations and PREPA’s regulators,” adding that it “was grandfathered into federal law, and nearly finalized,” when the fiscal board “refused to follow federal direction to execute the deal that had been agreed to by all sides.”
Through its actions, Assured further said, the board “ignored the clear intent of the [Puerto Rico Oversight, Management, and Economic Stability Act] PROMESA legislation and impeded PREPA’s modernization and revitalization.”
Railing against the board’s decisions, the insurer added that the fiscal panel and the government “continue to spend hundreds of millions of dollars on litigation and related expenses that, according to the latest Commonwealth fiscal plan, are estimated to total $1.5 billion over the next six years. This runs counter to the Oversight Board’s only specifically legislated purpose: to achieve fiscal responsibility and capital markets access.”
The monoline said it will continue “to vigorously enforce our property rights as a secured creditor in the PREPA Title III case, while also continuing to seek engagement with government parties to consensually resolve these matters,” but that it objects “the development of fiscal plans that do not make reasonable assumptions as to the issuer’s ability to meet its obligations, and do not respect the liens and constitutional debt payment priorities” established under Puerto Rico law.
“We believe that the government parties should measure success by their obligations and duties honored, not by the obligations and commitments cast aside,” Assured wrote.