- General obligation holders said to select Goldin Associates
- $357 million of general-obligation interest due Jan. 1
A group of investors holding Puerto Rico’s general-obligation bonds have hired restructuring adviser Goldin Associates LLC to represent them as the commonwealth seeks to reduce its debt burden, according to three people with knowledge of the matter.
Goldin Associates will advise the group in debt discussions, said the people, who requested anonymity because the talks are private. Puerto Rico and advisers to groups holding the island’s various bonds are set to meet Tuesday at Cleary Gottlieb Steen & Hamilton LLP’s New York office to discuss the island’s projected liquidity. Cleary Gottlieb has been representing the commonwealth in its plan to reduce its debt obligations.
“Today’s meeting with advisers for established bondholder groups is part of our ongoing efforts to maintain a constructive dialog with the island’s creditors surrounding the voluntary restructuring of the commonwealth’s debt in order to achieve a sustainable path forward,” Melba Acosta, president of the Government Development Bank, which manages the island’s debt, said in a statement Tuesday.
The general obligation bondholder group splintered from a broader coalition of more than three dozen firms that held $5.2 billion of Puerto Rico debt, people with knowledge of the matter said last month. Puerto Rico has $13 billion of general obligation debt which its constitution stipulates must be repaid before other expenses. The next payment to bondholders is $357 million of interest due Jan. 1.
The island’s other securities are backed by different repayment pledges and revenue streams, setting up a potential scenario where the different bondholder groups may compete over who gets the most of Puerto Rico’s revenue for repayment.
Puerto Rico general obligations sold in March 2014 and maturing July 2035, the most-actively traded commonwealth security in the past three months, changed hands Monday at an average price of 73.4 cents on the dollar, according to data compiled by Bloomberg. The average yield was 11.4 percent.
Harrison J. Goldin, who founded the firm in 1990, served as New York City’s comptroller from 1974 to 1989, during the city’s financial crisis. Goldin didn’t respond to phone and e-mail messages seeking comment.
The general-obligation investor group last month hired law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP for representation, according to two people with knowledge of the matter. Lisa Green, a spokeswoman for Paul Weiss, didn’t immediately respond to phone and e-mail messages left for comment.
About $267 million of Government Development Bank debt that Puerto Rico guarantees will mature Dec. 1. A missed payment would be the first default on the commonwealth’s direct debt. An island agency defaulted Aug. 1 on its bonds after lawmakers failed to allocate the funds.