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Bloomberg
Puerto Rico is poised to restructure the Government Development Bank’s debt by exchanging its bonds for $2.6 billion of new securities, the first such debt swap for the US territory since it collapsed into bankruptcy in May 2017.
The transaction will restructure about $4 billion of Government Development Bank debt.
Under a previously arra-nged agreement, investors will exchange their securities for new taxable bonds that will carry a 7.5 percent coupon and mature in 2040, according to bond documents for the transaction. Investors will receive 55 cents on the dollar, which includes principal and unpaid interest, according to the documents.
The exchange is the first of several that will likely be used by Puerto Rico to reduce the $74 billion of debt sold by various arms of the financially struggling island. While Puerto Rico and the bank’s creditors negotiated the deal out of court, a federal judge overseeing the commonwealth’s bankruptcy approved it on November 6 after bondholders voted in favour of the deal.