The Puerto Rico Aqueduct and Sewer Authority plans to continue paying its senior and senior subordinate bonds in the coming fiscal year.
PRASA has been one of the few Puerto Rico public sector bodies still paying its debt. As of June 30, it owed a total of $5.03 billion in debt, of which $3.3 billion was for the senior and senior subordinate bonds.
According to the Oversight Board-approved April 19 fiscal plan the authority owed $230.8 million in contractual debt service for the senior and senior subordinate bonds in fiscal year 2019, which starts June 1.
On Tuesday the board posted a letter on its website to Gov. Ricardo Rosselló saying it was approving his proposed fiscal 2019 budget for the authority and that the budget included $230.8 million for debt service for the senior and senior subordinate bonds. The letter also indicated that “creditors” were granting “relief” to the tune of $221.5 million in the coming fiscal year.
The U.S. Department of Agriculture and the U.S. Environmental Protection Agency have been forbearing on past due Rural Development Bonds and State Revolving Fund loans. On Wednesday a board spokeswoman said discussions were continuing, though PRASA had not yet made agreements about reduced payments in fiscal 2019.
The payment of $231 million of PRASA debt in fiscal year 2019 would be an improvement for creditors from the allotment found in the board-approved fiscal plan. The plan said that assuming the inclusion of federal funds would allow the authority to pay $91 million of scheduled debt service in the year.
Despite this apparent deviation, the board’s letter to the governor says the proposed budget is “compliant” with the board’s fiscal plan.
The letter says that the governor should resubmit the budget by June 20 with supporting documentation and including budgetary resolutions. If this is done, the board promises to approve the budget by June 29.
In October 2017, PRASA posted a notice to the Electronic Municipal Market Access web site that said it was negotiating a restructuring of the senior revenue bonds without principal reductions. Instead, PRASA and the bondholders have discussed postponing interest payments, extending maturities, and lowering interest rates.
PRASA’s senior revenue bonds are rated Ca by Moody’s Investors Service, CC by S&P Global Ratings, and C by Fitch Ratings.
Along with owing for the senior and senior subordinate bonds, as of June 30, 2017 PRASA owed $1.26 billion in Puerto Rico government guaranteed debt, $163 million in superaqueduct debt borrowed through the Public Finance Corp. and promised to be repaid if funds were available, and $314 million in debt to the Government Development Bank for Puerto Rico and for other PFC bonds.
The Puerto Rico government guaranteed debt consisted of $393 million of Rural Development Bonds, $581 million in State Revolving Fund loans, $285 million in 2008 refunding bonds.