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  • Writer's pictureThe San Juan Daily Star

Gov’t hires advisers for refinancing of COFINA debt

By The Star Staff

The government of Puerto Rico has hired advisers to explore refinancing Puerto Rico Sales Tax Financing Corp. (COFINA by its Spanish acronym) restructured debt.

An announcement to the markets over the weekend stated that COFINA has appointed a syndicate of investment banking firms to evaluate, from time to time, potential refinancing transactions for all or a portion of COFINA’s outstanding Restructured Sales Tax Bonds, Series 2019A and 2019B.

The syndicate is led by J.P. Morgan Securities LLC, acting as lead dealer manager, with BofA Securities Inc., Barclays Capital Inc. and Morgan Stanley & Co. LLC acting as co-senior managers.

“The appointment will be in effect through June 30, 2023, subject to extension and changes at the discretion of COFINA,” the statement says. “The size, timing and structure of Potential Transactions are subject, among other things, to market conditions, approval by the Board of Directors of each of COFINA and the Puerto Rico Fiscal Agency and Financial Advisory Authority and the Financial Oversight and Management Board for Puerto Rico.”

COFINA and the Fiscal Agency and Financial Advisory Authority (AAFAF by its Spanish initials) are under no obligation to execute any potential transaction or other transaction and reserve the right to change or modify their plans as they deem appropriate, the statement said.

“There is no guarantee that a Potential Transaction will be consummated, that any particular outstanding bonds or other obligations of COFINA will be purchased, exchanged, redeemed or otherwise defeased, or that any new COFINA bonds will be offered, sold or issued,” the statement read.

It was in February that AAFAF Executive Director Omar Marrero Díaz first sought out opinions of possible refinancing options to be able to reduce interest on payments.

In 2019, U.S. District Court Judge Laura Taylor Swain approved a plan to restructure $17 billion of COFINA debt, marking the second deal between the bankrupt U.S commonwealth and its creditors to win court approval. The COFINA restructuring slashed debt service on the sales tax-backed debt by $17.5 billion over nearly 40 years, saving the island an average $456 million annually in debt payments.

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