Puerto Rico government: GDB Qualifying Modification successfully completed
SAN JUAN – The Puerto Rico Fiscal Agency and Financial Advisory Authority (Aafaf by its Spanish acronym) and the Government Development Bank for Puerto Rico (GDB) announced the consummation of the qualifying modification for the GDB under Title VI of the Puerto Rico Oversight, Management and Economic Stability Act (Promesa).
The completion of the GDB’s qualifying modification marks the first successful use of the collective action procedures under Title VI of Promesa and the first Puerto Rico debt restructuring transaction closed under the law enacted for that purpose.
“The closing of the GDB debt restructuring is a historic milestone in Puerto Rico’s road to economic recovery. The closing of the qualifying modification for GDB is clear evidence that Puerto Rico has the credibility and resolve necessary to resolve its fiscal challenges. My administration is committed to continue negotiating in good faith with Puerto Rico’s creditors and pursue creative solutions that safeguard the best interests of the people of Puerto Rico,” Gov. Ricardo Rosselló said.
“The consummation of this transaction, for example, will provide combined debt service savings to the majority of Puerto Rico’s municipalities of approximately $55 million during the January 1 and July 1, 2019 payments, while also providing GDB’s diverse creditor constituency with adequate recoveries given the financial circumstances of the GDB,” Rosselló added.
“Today’s achievement is the last step in what has been a long and difficult process that was only possible thanks to the leadership and support of Governor Rosselló and a constructive disposition to compromise by all of GDB stakeholders, including bondholders, municipalities, and our local cooperatives,” added Christian Sobrino, CEO of Aafaf and president of the GDB.
The GDB Debt Recovery Authority, a newly formed statutory public trust and government instrumentality, has issued nearly $2.6 bullion of 7.5% GDB Debt Recovery Authority Bonds (Taxable) due 2040 (DRA Bonds) to holders of participating bond claims of the GDB, with each holder receiving $550 of DRA Bonds for each $1,000 of participating bond claims of GDB they previously held. The DRA Bonds are expected to be delivered over the next few days, the release added.