PREPA, Creditors Agree to 15-Day Extension

The Puerto Rico Electric Power Authority and its creditors have agreed to extend their previous forbearance agreement another 15 days, PREPA announced late Monday.

The forbearance agreements were set to end Tuesday night.

PREPA has over $8.3 billion in power revenue bonds outstanding. Any default on these bonds would be the biggest monetary default on municipal bonds in United States history.

In June 2014 Fitch Ratings dropped PREPA deeper into non-investment grade, citing inadequate liquidity to make near-term bank loan payments. In early July PREPA posted a notice to the Electronic Municipal Market Access website announcing that it drawn on its debt service reserve to make the July 1 bond payment.

In August 2014 PREPA reached separate forbearance agreements with a portion of its bondholders/bond insurers, bank lenders, and the Government Development Bank for Puerto Rico.

In the fall, as part of an agreement with forbearing bondholders, PREPA hired Lisa Donahue as chief restructuring officer. At the time, Puerto Rico indicated that a restructuring of the authority's debt was likely.

In the forbearance agreements PREPA promised to provide a restructuring plan by Monday, March 2. It missed this deadline.

Full story to follow.

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Puerto Rico
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