Puerto Rico Electric Reaches Tentative Pact With Creditors
- Accord is the final piece in a $8.2 billion debt restructuring
- Any possible debt restructuring requires legislative approval
Puerto Rico’s electric utility reached a tentative agreement with insurance companies MBIA Inc. and Assured Guaranty Ltd., along with some bondholders, to restructure the utility’s $8.2 billion of debt, according to two people with knowledge of the discussions.
The accord sets into motion what would be the largest-ever restructuring in the $3.7 trillion municipal-bond market and potentially averts a default on $196 million of interest due Jan. 1. Under the pact with the Puerto Rico Electric Power Authority, the insurers will provide about $450 million in the event of a default through what’s known as a surety bond, according to the people, who asked for anonymity because the negotiations are private. Prepa may execute a debt-exchange in the second quarter, one person said.