Governor Wanda Vázquez Garced announced Sunday that she does not accept the agreement reached by the Fiscal Control Board and a group of creditors.
“The new agreement also improves the position of creditors, as they receive new legal protections that were not part of the agreement reached last September. This includes the issuance of new subordinate COFINA bonds, which protect creditors from general obligations through a statutory lien, as well as the creation of a reserve account, whose deposits will also be protected in favor of the bondholders by means of a statutory lien.In addition, although the agreement contains certain positive aspects, such as a substantial cut in total The debt contains others that are worrisome.
For all the above, and after carefully analyzing the terms of this new agreement and in view of the fact that the Board of Fiscal Supervision refused to improve the treatment of pensioners therein, my government has determined not to join said new agreement according to its current terms Again, my position during this process has been that if bondholders receive better treatment in a new agreement, pensioners must also receive better treatment. This is a matter of basic justice.
Pensioners, as I indicated in September, have already made sacrifices in the past. However, while bondholders receive new legal protections in this new agreement, pensioners receive no improvement. Given this scenario, I cannot support this new agreement, ”said the governor in written statements.
Vázquez Garced had publicly supported the previous agreement.
The president of the Fiscal Control Board, Jose Carrión, third, announced that they reached a new agreement with certain bondholders of the Commonwealth of Puerto Rico (ELA) within a much broader framework for the Adjustment Plan, and thus resolve 35 billion dollars in claims related to and not related to debt.
“This new and better agreement is a victory for Puerto Rico. It reduces total debt payments in relation to the agreement we reached last year, pays the debt of the Commonwealth before and has significantly greater support from bondholders. , which further facilitates the exit of Puerto Rico from bankruptcy, which has lasted for three years, ”said Carrión, third in written statements.
According to Carrión, the new agreement reduces the debt service of the ELA (including the capital and interest of COFINA senior levy bonds) by 56 percent, from 90.4 billion to 39.7 billion dollars.
This agreement reduces total debt service by an additional $ 5 billion when compared to the previous Support Agreement that the Supervisory Board had reached with a smaller group of bondholders last year.
That means that now Puerto Rico would completely resolve its inherited debt in 20 years, that is, 10 years earlier than with the previous agreement.
The new agreement reduces $ 35 billion of debt and other liabilities by 70 percent (that is, $ 24 billion), to less than $ 11 billion, representing an additional reduction of $ 1 billion in relation to With the previous agreement. Holders of about $ 8 billion in bonds support the agreement, including Puerto Rican credit unions and traditional municipal investors.
“The new agreement is another step forward for Puerto Rico, and brings the Island much closer to bankruptcy and the beginning of a true economic recovery. Bankruptcy is stopping Puerto Rico. We need to resolve that, and with this agreement, Puerto Rico will resolve it faster, protecting the pensions of retirees and government services that the people of Puerto Rico so much need and deserve, as specified by the budget and the certified Fiscal Plan of the Board of Directors. Supervision “said the executive director of the Board, Natalie Jaresko.
This agreement provides an average reduction of 29 percent for holders of general obligation bonds (GO) and an average reduction of 23 percent for holders of Public Building Authority (PBA) bonds by its acronym in English) of Puerto Rico.
ELA creditors would receive 10.7 billion dollars in new debt, half in GO bonds and the other half in COFINA junior lien bonds, in addition to 3.8 billion dollars in cash.
Likewise, the new agreement, which was approved by the majority of the members of the Board, reduces the service of the maximum annual debt of the ELA payable in any future year, including COFINA senior levy bonds, by more than 70 percent, from 4.2 billion dollars a year to 1.5 billion a year millions of dollars.
The Board agreed to resolve its claim of $ 6 billion in bonds that, according to the same Board, exceeded the ELA debt limit.
You might be interested:
– .
