Hedge Funds Reveal How Much Puerto Rico Sales-Tax Debt They HoldBy
Cofina bondholders fighting in court to protect recovery rate
Decagon Holdings manages $911.2 million of the Cofina debt
A group of hedge funds that hold about $3 billion of Puerto Rico sales-tax bonds released court documents showing how much of the commonwealth’s debt that each manages.
The disclosure is part of Puerto Rico’s record bankruptcy. The island is seeking to cut $74 billion sold by the commonwealth and its agencies that helped fill budget deficits as its economy shrunk in the past decade. Numerous agencies sold the bonds, which are repaid from various revenue pledges.
Bondholders are now fighting over those different revenue sources. A key issue of Puerto Rico’s bankruptcy is which type of debt should receive a better recovery rate: $13.3 billion of general obligations, which have a constitutional guarantee of repayment, or $17.6 billion of bonds, called Cofinas, backed by a dedicated portion of the island’s sales-tax receipts.
The Cofina structure has a junior-lien component, meaning those securities are repaid after the senior-lien bonds. While the pool of bondholders designates itself as the senior Cofina group, some members hold junior sales-tax bonds.
The amounts that each firm manages, as of July 21, are as follows:
- Decagon Holdings, LLC: $911.2 million of Cofinas, including $442 million of junior sales-tax bonds
- GoldenTree Asset Management LP: $528.5 million of sales-tax debt, including $97.4 million of junior Cofinas
- Tilden Park Investment Master Fund LP: $465 million of sales-tax bonds, including $9 million of junior Cofinas
- Canyon Capital Advisors LLC: $303.1 million of senior Cofinas
- Scoggin Management LP and Old Bellows Partners LP: $275.3 million of senior sales-tax bonds
- Whitebox Advisors LLC: $159.2 million of Cofinas, including $27 million of junior sales-tax debt
- Merced Capital LP: $36.2 million of senior Cofinas
- Taconic Capital Advisors LP: $154.3 million of sales-tax debt, including $22 million of junior Cofinas
- Varde Partners Inc.: $111.6 million of senior sales-tax bonds
- Cyrus Capital Partners LP: $93.1 million of senior Cofinas
- Aristeia Capital LLC: $107 million of sales-tax debt, including $4.4 million of junior Cofinas
- Merced Capital LP: $36 million
The firms hold a combined $2.5 billion of senior Cofinas and $602 million of junior sales-tax debt.
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