Post by Logan on Apr 5, 2016 19:32:03 GMT -6
Investors holding almost $5 billion of Puerto Rico general-obligation bonds have released a plan to provide debt relief to the island, which includes a new $750 million offering to stave off a July 1 default.
The bondholders would agree to defer principal repayments for five years through a consensual exchange offer, saving the commonwealth $1.9 billion over the period, according to the proposal. It also stipulates issuing $750 million of new general obligations at a 7 percent interest rate to avoid a default on an $805 million general-obligation payment on July 1. Those securities would also pay only interest through June 2020.
The investor proposal comes after the Puerto Rico Senate passed a bill calling for a moratorium on a wide range of debt payments, including general-obligation bonds, through January 2017. The $13 billion of securities are guaranteed by the island’s constitution.
“What the bondholders are doing seems to at least be a more productive step than what Puerto Rico is trying to do,” said Dan Solender, who manages $18 billion of state and local debt, including commonwealth securities, as head of municipals at Lord Abbett & Co. in Jersey City, N.J.
Read more: www.bostonglobe.com/business/2016/04/05/puerto-rico-investors-offer-new-bond-deal-avert-default/Z1zlu73MwCFOkFYodC8EfN/story.html
The bondholders would agree to defer principal repayments for five years through a consensual exchange offer, saving the commonwealth $1.9 billion over the period, according to the proposal. It also stipulates issuing $750 million of new general obligations at a 7 percent interest rate to avoid a default on an $805 million general-obligation payment on July 1. Those securities would also pay only interest through June 2020.
The investor proposal comes after the Puerto Rico Senate passed a bill calling for a moratorium on a wide range of debt payments, including general-obligation bonds, through January 2017. The $13 billion of securities are guaranteed by the island’s constitution.
“What the bondholders are doing seems to at least be a more productive step than what Puerto Rico is trying to do,” said Dan Solender, who manages $18 billion of state and local debt, including commonwealth securities, as head of municipals at Lord Abbett & Co. in Jersey City, N.J.
Read more: www.bostonglobe.com/business/2016/04/05/puerto-rico-investors-offer-new-bond-deal-avert-default/Z1zlu73MwCFOkFYodC8EfN/story.html