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  • The San Juan Daily Star

Judge seeks changes in language of Public Finance Corp. bond issuance

By The Star Staff

Puerto Rico’s Public Finance Corporation’s (PFC) Title VI restructuring is closer to gaining approval, but U.S. District Court Judge Laura Taylor Swain at a hearing Wednesday requested changes in the language of the debt deal to move forward a future bond issuance.

Swain requested changes in the text on the future bond issuance at the request of Government Development Bank (GDB) collateral monitor attorney Benjamin S. Kaminetzky of Davis Polk. He opposed a proposed $47.7 million bond issuance, arguing that no more GDB Debt Recovery Authority debt can be issued, as contemplated by the restructuring. The changes would clarify that the restructuring would not affect the litigation over the issuance of the debt.

If the Qualifying Modification is confirmed, the $1.5 billion PFC debt will be reduced significantly to a $13.8 million payment and the $47 million in new bonds, according to court documents. Under the deal, several commonwealth public corporations would remove PFC debt liabilities from their balance sheets, Financial Oversight and Management Board attorney Brian Rosen of Proskauer Rose, as well as Puerto Rico Fiscal Agency and Financial Advisory Authority attorney Matthew P. Kremer of law firm O’Melveny, told the court.

The recent bonus payment made by the government to public workers was at the center of the proposed settlement. Yusif Mafuz Blanco, a PFC bondholder, criticized the cut in lieu of the fact that while the government says it has no money, it opted to make millions in payments in the special bonus to public workers. He said the PFC would be getting 4% of their bond value.

Swain overruled the objection.

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