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Here Come The Blackouts: Largest Ever Muni Restructuring Falls Apart As Puerto Rico’s Power Authority Balks At $9 Billion Deal
Be prepared for the next great transfer of wealth. Buy physical silver and storable food.
zerohedge.com / by Tyler Durden on 01/24/2016 – 15:20
Early last month, just as Puerto Rico Governor Alejandro García Padilla traveled to Capitol Hill in an ill-fated effort to convince lawmakers that the island’s various bankrupt public entities should be allowed to utilize US bankruptcy laws, PREPA (the commonwealth’s heavily indebted power utility) was busy cementing the largest restructuring in muni market history.
The deal was actually sealed months earlier, but the monolines were holding things up. Ultimately, all sides finally agreed that it was in everyone’s best interest to strike a deal and once MBIA and Assured Guaranty were on board, the stage was set for an $8.2 billion restructuring.
As part of the deal, creditors agreed to take a 15% haircut and the insurers would put up a $450 million surety bond. The agreement would have knocked $700 million off the utility’s debt service burden. It also would have reduced PREPA’s principal owed by $600 million.
We say “would have” because that deal is apparently off the table.
“Chances of Puerto Rico’s power utility PREPA reaching a deal with creditors to restructure its $8 billion debt were cast in uncertainty on Friday as one deadline passed and the utility baulked at the new terms offered for a new one,” Reuters reported on Saturday. “PREPA said in December that it had reached a deal with 70 percent of all creditors [but] for that to work, Puerto Rico needs to pass legislation enabling PREPA to create a new charge on customer invoices specifically to pay the debt, so that the new bonds could earn the higher ratings that creditors expect.”
The post Here Come The Blackouts: Largest Ever Muni Restructuring Falls Apart As Puerto Rico’s Power Authority Balks At $9 Billion Deal appeared first on Silver For The People.
Thanks to BrotherJohnF
Source: http://silveristhenew.com/2016/01/24/here-come-the-blackouts-largest-ever-muni-restructuring-falls-apart-as-puerto-ricos-power-authority-balks-at-9-billion-deal-2/
