The Puerto Rico Highways and Transportation Authority may default as soon as next week, El Nuevo Dia newspaper  reported, citing Miguel Torres, the secretary  of the commonwealth’s transportation and public works department.

However, Puerto Rico Government Development Bank president Javier Ferrer refutes this notion.

“The Puerto Rico Highways & Transportation Authority will not default on the payment due on its bonds payable on July 1,” Ferrer told The Bond Buyer. “The funds are on deposit with the trustee and will be paid to bondholders as always.  The indenture is structured as a gross pledge which requires that monies generated by the HTA are first used to pay debt service on its outstanding bonds.”

A spokesman for the GDB added that the authority will not default next week. The El Nuevo Dia story is wrong, the spokesman said.

The Authority has $5.2 billion in debt outstanding according to Janney Capital Markets.

Torres gave testimony on the authority’s financially troubled position to a Puerto Rico Senate committee on Tuesday, Primera Hora reported. The Puerto Rico Government Development Bank and the Department of Estate have the lead in handling the problems at the authority, Torres told El Nuevo Dia. They are putting together revenue options to be ready by next week, he said.

“The bankruptcy of the PRHTA is not an option,” El Nuevo Dia quoted Torres as saying.

On May 1 the president of the Government Development Bank told a joint Puerto Rico committee that his bank was “fragile,” pointing to the authority as his prime area of concern. The authority accounts for 25% of the bank’s loans.

Sources at Torres’s department and the authority have not responded to Bond Buyer inquiries.

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