PROMESA

U.S. Justice Department responds to hedge funds seeking reimbursement for Oversight Board impairments to bonds.

Justifying the latest bid to recover funds related to illegally issued debt, the board says the legislature failed to authorize the pension system bonds.

An IRS opinion that the existing bonds are tax-exempt is key to the exchange offer.

The delay of $220 million of pension savings is the latest "upsetting piece of news for bondholders."

The board and the governor remain about $500 million apart on spending.

Moody's put the Illinois State Toll Highway Authority's A3 rating on review for a downgrade in the wake of the Puerto Rico ruling.

The anticipated surplus for fiscal years 2019 through 2013 has dropped to $11.6 billion from $15.1 billion, leaving less money for debt service and capital spending.

The plan continues a cut to the pension system found in earlier versions.

New expectations for disaster funding, gross national product growth rates, and population may change projections of money for debt.

Assured Guaranty CEO Dominic Frederico said at the recent AFGI Puerto Rico Bankruptcy Risk Summit that "the open disregard of law" among public officials in Puerto Rico "could give public officials elsewhere reasons to believe they could escape their obligations."

James Spiotto, Managing Director at Chapman Strategic Advisors, explains why he believes U.S. district court Judge Swain's decision on special revenue bonds was wrong, and the impact it may have on revenue bond issuance, at the recent AFGI Puerto Rico Bankruptcy Risk Summit.

KBRA senior managing director William Cox, when discussing lessons learned from the Puerto Rico debt crisis at the recent AFGI Puerto Rico Bankruptcy Risk Summit, noted that the behavior of management sends "strong signals regarding credit character," in this case "chronically late financial statements."

At the recent AFGI Puerto Rico Bankruptcy Risk Summit, Matt Fabian, partner and lead analyst at Municipal Market Analytics, noted that investors "would like to have more distinguishing between credits, but market realities limit their ability to do so."

Adam Bergonzi, Chief Risk Officer of National Public Finance Guarantee, said at the recent AFGI Puerto Rico Bankruptcy Risk Summit that the event was created as a rebuttal to an "oft-heard sentiment" that the commonwealth's bankruptcy was an anomaly.

Critics pointed to the agreement's failure to lower operating costs and its "very favorable" treatment of Assured Guaranty.

The restructuring is expected to save PREPA and Puerto Rico residents about $3 billion in debt service payments over the next 10 years.

The board wants to recover more than $1 billion in payments and fees on bonds it deems illegal.

The governor accused the Oversight Board of having “overstepped its boundaries, making it an even more undemocratic entity.”

The suits against non-bond creditors are a step in an effort to claw bank money that will extend to bondholders.

Democratic representatives hailed the decision, which averts an interruption of the effort to restructure the island's debt.