Puerto Rico officials have called a meeting next week with advisers to some of the island’s bondholders after the Obama administration pressed Congress to give the U.S. territory a boost in its debt restructuring negotiations, according to three people with knowledge of the matter.
Investment banks representing several sets of creditors have been invited to meet the restructuring officials on Tuesday at the New York office of Cleary Gottlieb Steen & Hamilton LLP, the law firm representing Puerto Rico in its debt-reduction efforts, said the people, who asked not to be named because the information isn’t public.
The planned meeting follows a proposal released late Wednesday by the U.S. Treasury Department and two other federal agencies that calls for giving the commonwealth unprecedented authority in restructuring its $73 billion debt burden through bankruptcy protection. The plan has drawn criticism, with some participants in the municipal bond market referring to the powers Puerto Rico would get as "Super Chapter 9" because the island would be allowed to file for bankruptcy protection while U.S. states are not.
Barbara Morgan, a spokeswoman at SKDKnickerbocker who represents the Puerto Rico agency responsible for the commonwealth’s borrowing, declined to comment.
Reuters reported earlier Thursday that a meeting would take place.
Puerto Rico and its restructuring adviser, Millstein & Co., will discuss next week the island’s forecasted liquidity, the people said. The meeting will advance earlier talks with some financial advisers over a model that set out Puerto Rico’s expectations for tax-revenue collection and government spending, said the people.
Jim Millstein, founder of New York-based Millstein, declined to comment.
Only financial advisers who have already signed confidentiality agreements with Puerto Rico binding them not to disclose discussions will be allowed at the meeting, said the people.
Talks about a reorganization of the island’s Government Development Bank’s debt ended without a deal this week. The deal being discussed would’ve injected cash that could’ve been used to cover a $355 million debt payment due Dec. 1 to some holders of the development bank bonds. Puerto Rico Governor Alejandro Garcia Padilla said Thursday that the agency may fail to make the payment.