Puerto Rico Gov. Ricardo Rosselló Nevares introduced a bill in the Puerto Rico legislature to support the Puerto Rico Sales Tax Financing Corp. (COFINA) restructuring.
The deal would give Puerto Rico a 32% reduction in COFINA debt and more than $17 billion in debt service savings, part of an effort to strengthen the island’s economy and restructure more than $51 billion of debt. The Plan Support Agreement and Summary of Terms and Conditions can be found on the Puerto Rico Oversight Board’s website.
“This presents a clear signal that the Rosselló Nevares administration is taking the right steps to replenish the good name and credit of Puerto Rico,” said Christian Sobrino Vega, executive director of the Puerto Rico Fiscal Agency and Financial Advisory Authority.
The governor said, “This agreement allows us to restructure the debt that other administrations assumed. With the savings achieved, we secure funds to provide government services and to protect the most vulnerable. In addition, we avoid more costly and extensive legislation.”
On June 7 the lawyer for COFINA announced the deal and made the terms public. On Aug. 30 the board announced that it had entered a plan support agreement and term sheet with the governor, COFINA, bond insurers, groups representing holders of COFINA senior and COFINA subordinate bonds, and local bondholder group Bonistas del Patio.
As of February 2017 Puerto Rico had $17.6 billion in COFINA bonds outstanding by par value, making COFINA debt its biggest class of debt.
The COFINA deal is part of the restructuring of several classes of Puerto Rico debt guided by the Puerto Rico Oversight, Management, and Economic Stability Act, a federal law passed in the summer of 2016.
