The Puerto Rico Electric Power Authority, moving forward with its restructuring agreements, is preparing to privately place $111 million in bonds by April 18.
The authority disclosed plans for the issue on the Electronic Municipal Market Access website on Friday. The bonds are part of the restructuring support agreements the authority has signed with successive groups of its creditors since September. The bonds' terms have been outlined in the bond purchase agreements that have accompanied the agreements.
The RSA and BPA of Jan. 27 indicated that Assured Guaranty, National Public Finance Guarantee, Oppenheimer Funds, Marathon Asset Management, Knighthead Capital Management, Goldman Sachs Asset Management, Franklin Advisors, BlueMountain Capital Management, and Angelo, Gordon & Co. commit to purchasing two bonds, each of $55 million.
The publicly available versions of these documents block out how much each of the entities are to purchase.
The BPA says that the purchasers are to acquire the 2016A bonds once they decide the Puerto Rico government has passed acceptable legislation reforming PREPA and Puerto Rico's energy sector. The government adopted this legislation last month.
The BPA also says the purchasers are to buy the 2016B bonds after they are satisfied that the petition of PREPA with the Puerto Rico Energy Commission for a securitization charge satisfies the terms of the RSA.
Both series of bonds are to mature serially and bear a 10% annual interest rate, according to the BPA. Interest will be paid every six months and the bonds will have a final maturity on July 1, 2019.
A Feb. 19 amendment to the BPA said that the bond purchasers must buy the Series 2016A bonds by 10 a.m. on March 25 and the Series 2015B bonds by 10 a.m. on April 18.
PREPA, which disclosed its financial crisis in mid-2014, negotiated a deal with a group of bondholders that includes a 15% haircut on their principal. Any default or restructuring on their roughly $8.4 billion in bond debt would create the greatest municipal bond default in United States history.
