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Sources: Debt-restructuring Talks with Creditors to Resume this Week

By on January 26, 2016

SAN JUAN – The Puerto Rico government will resume this week debt-restructuring talks with its creditors, with meetings between advisers representing the sides set to take place on Friday, Jan. 29, Caribbean Business sources said Tuesday.

During a briefing to the press earlier Tuesday, Public Affairs Secretary Jesús Manuel Ortiz said La Fortaleza didn’t have information on when debt-restructuring talks would resume. Citing sources, The Wall Street Journal also reported earlier Tuesday that meetings between the government and representatives of several bondholder groups were going to take place Friday.

Creditors were recently briefed on the revised long-term Fiscal & Economic Growth Plan (FEGP), which states a larger fiscal problem for the commonwealth and has prompted a revision to the commonwealth’s debt-restructuring proposal to creditors.

Commonwealth advisers officially announced in November the government’s intention to put together a “superbond” deal, whereby Puerto Rico bondholders would be able to exchange their existing commonwealth debt into new, more secure paper. The idea underpinning the proposal is to restructure, in one fell swoop, a large chunk of the island’s $70 billion debt, while taking into consideration the particularities of each type of commonwealth debt. GDB President & Chairwoman Melba Acosta recently confirmed that the administration still seeks the “superbond” deal.

“We are committed to engaging in conversations with our creditors and their advisers about our current fiscal standing,” the GDB chief stated when announcing the FEGP’s revision. “We continue our plan to develop a comprehensive set of solutions, including our thoughts regarding a restructuring proposal, wherein all parties make the necessary sacrifices that will support the long-term sustainability of the Commonwealth’s economy.”

The administration of Gov. Alejandro García Padilla continues to bet on congressional action, particularly over access to a debt-restructuring regime, during the first quarter of the year as it tries to avoid additional defaults amid a steeper debt-service schedule that begins this summer.

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