To gain approval from a large group of go bondholders, the board made a series of modest concessions: Last week, Wanda Governor Vázquez Garced officially accepted the financing agreement that regulates the $8.2 billion Community Development Grants for Disaster Recovery (CDBG-DR). The deal proposed in January by HUD secretary Ben Carson limits the use of long-delayed funds. Puerto Rico has partnered with a large portion of its bondholders with general obligations – as well as with the holders of Puerto Rico`s construction administration obligations ” which are protected by the Constitution. Judge Laura Taylor Swain has decided to certify a Title III restructuring agreement for bondholders of the Sales Tax Financing Corporation (COFINA in Spanish), which amounts to more than $17 billion of Puerto Rico`s public debt. The 40-year agreement allows senior cofina bondholders to receive 93 cents on the dollar of the initial price, while juniors receive 54 cents on the dollar. The Financial Oversight and Management Board (FOMB) has reached an agreement with the Legitimate Debt Coalition (CDL, in Spanish) and with the owners of general commitment (GO) bonds to reduce public debt by 70% and prevent creditor disputes. “This new agreement is another step forward for Puerto Rico, bringing the island closer to bankruptcy,” said Natalie Jaresko, FOMB Executive Director. According to José B. Carrión, president of THE FOMB, Puerto Rico`s reduced debt would be repaid in about twenty years. In an economy that has contracted over the past 13 years, how can one approve an agreement that increases the debt every year and governs the country for the next 40 years? Governor signs agreement to regulate the use of CDBG-DR funds The announced agreement is not supported by Governor Wanda Vásquez Garced. This series of two articles provides general information about the debt restructuring agreement, including how it will unfold on speculators` debt. For example, funds can only be used for mitigation projects approved by the new federal financial monitor and the FOMB. In addition, the Puerto Rican government must present an action plan for the funds and not use them for projects related to the island`s electricity grid.
The agreement also establishes an implementing regulation that requires people working on state-funded reconstruction projects to pay at least $15 an hour. COFINA is one of the five bodies that the Budget Board entered into the bankruptcy process through Title III of PROMESA, the others being PREPA (the public electricity supplier), the pension system, the motorway authority and the central government (the Commonwealth). Restructuring consists of an agreement with creditors that establishes a new debt payment structure. . . .