Puerto Rico’s government has reached a deal with a bondholder group to restructure more than a third of the debt owed by its troubled power company as the utility moves toward privatization.
Officials call it an “important milestone” and promise the deal will not require Puerto Ricans to be hit with rate increases to cover debt service if there is a drop in power usage.
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Bondholders will exchange the debt they hold from Puerto Rico’s Electric Power Authority for two new bonds. One will be exchanged at 67.5 cents on the dollar and the other at 10 cents on the dollar. They will be linked to Puerto Rico’s economic recovery.
The deal announced Monday night marks the first time Puerto Rico will not pay off a revenue bond in full.
