Gov’t Justifies Cancelation of Prepa RSA
Says 2019 Deal No Longer ‘Feasible’ with Economic Shifts
Gov. Pedro Pierluisi decided last week to cancel the Puerto Rico Electric Power Authority’s (Prepa) restructuring support agreement (RSA) not only due to the lack of legislative support but also because the economic underpinnings of the deal have changed since it was concluded in 2019, the governor’s point man on commonwealth debt talks said on Monday.
In a roundtable with reporters, Secretary of State Omar Marrero Díaz said the Pierluisi administration seeks a debt settlement for Prepa that is “an improvement” over the current RSA proposal—including a deeper cut in the troubled public utility’s legacy debt and the elimination of controversial transition surcharges that were to be paid by customers over the 45-year life of newly issued securitized bonds in the proposed deal.
This would be the fourth attempt since 2014, when Prepa started to default on its debt, to restructure the bankrupt utility’s $9 billion in legacy debt and nearly $4 billion in unfunded pension liabilities. The governor said in a statement last week that the RSA’s implementation is “neither feasible nor in the best interests of Puerto Rico,” explaining that “the circumstances prevailing when the RSA was negotiated with creditors back in 2019 have changed significantly, including worldwide economic conditions, such as rising inflation and signific…
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