Fiscal Team Briefs Governor On Efforts To Tackle Looming Debt Wall
SAN JUAN — On Monday, the Puerto Rico government’s fiscal team briefed Gov. Alejandro García Padilla on plans to tackle the commonwealth’s looming debt payments, particularly the $422 million owed by the Government Development Bank (GDB) in less than a week.
The bank’s president & chairwoman, Melba Acosta, said the commonwealth is “talking with different groups” about separate deals. “With some groups, we are just talking about forbearance and maybe extending maturities. With others…maybe we are doing something else,” she conceded.

La Fortaleza
Yet officials continue to warn the government could still default — while declaring a moratorium on GDB’s debt payments — on as much as half of the $422 million due May 2.
“We have been meeting with a group that owns about $120 million of the $422 million [May] payment, as well as with another group that holds a lesser amount. Obviously, if all these alternatives materialize, we are talking about roughly half of the payment. So we are probably going to use the [recently enacted] moratorium law,” warned Acosta, who is expected to travel to New York this week to work “on various matters.”
Caribbean Business reported on April 19 that a tentative deal could have been struck with a GDB creditor group owning the $120 million of the May payment and about a fourth of the bank’s roughly $4 billion debt. In addition to a forbearance agreement, this creditor group would be willing to exchange its GDB debt for new paper amid a haircut, or reduction to principal, in the vicinity of 50%, sources added.
“All the creditors are watching each other. So, you know, the first that reaches an agreement sets a precedence over the rest,” said the commonwealth’s lead restructuring adviser, Millstein & Co.’s Jim Millstein, who traveled to the island along with Richard Cooper, a partner at New York-based law firm Cleary & Gottlieb, to take part in Monday’s meeting.
When asked whether agreements have been reached with any of the GDB’s creditor groups, both Acosta and Millstein said negotiations continue. The GDB chief believes they are closing in on some deals, “but terms are not final…. There is nothing final.”
The commonwealth is also engaging other GDB creditors, including a group of local cooperatives that hold about $30 million of the GDB’s May payment, sources said, in an effort to strike forbearance agreements.
Other officials attending Monday’s meeting at La Fortaleza were Chief of Staff Grace Santana, Justice Secretary César Miranda, Treasury Secretary Juan Zaragoza, Office of Management & Budget Director Luis Cruz and Secretary of State-designate Víctor Suárez, who was recently appointed chief of the island’s new fiscal agent.
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