Dive Brief:
- Puerto Rico Gov. Ricardo Rossello (NP) wants to renegotiate a debt restructuring deal struck a year ago that allowed the island's utility, the Puerto Rico Electric Power Authority (PREPA), to reduce debt, according to Bloomberg.
- The site reports Rossello is trying to convince MBIA Inc., Assured Guaranty Ltd. and Syncora Guarantee Inc., to accept less that they previously agreed. The companies insure about $2.2 billion in bonds for PREPA and took no losses on that amount in the original deal.
- Last year's deal addressed $9 billion in utility debt, a part of Puerto Rico's $70 billion debt crisis that spiraled after the loss of tax credits in 2006. The deal was signed by former Gov. Alejandro Garcia Padilla (D).
Dive Insight:
It's not clear how far along the idea is, nor how much leverage Puerto Rico might have, but PREPA's debt restructuring arrangement may be about to come back into the spotlight.
A restructuring support agreement (RSA) was agreed to in late 2015 by former Gov. Alejandro Garcia Padilla. The RSA allows PREPA to exchange debt owed to bondholders for new securitization notes valued at 85% of their existing claims.
MBIA, Assured Guaranty, and Syncora were not included in that agreement, however, and have taken no losses on the deal. It is there Bloomberg reports that the New Progressive Party governor may look to attempt to extract concessions, but no formal negotiations have been opened.
Among other provisions, funds from the restructuring are being considered to bring more natural gas and renewable generation to the island's energy mix, and move it away from a dependence on fuel oil-generated power.
Last summer the U.S. Supreme Court rejected Puerto Rico's bid to revive its Recovery Act, a debt restructing law that would have impacted over $20 million in utility debt. Upholding the Recovery Act could would have stopped the agreed-upon restructuring by allowing Puerto Rico to put PREPA into bankruptcy.
