A deal struck between the Puerto Rico oversight board and
creditors of its some $35 billion in outstanding debt will act
as a placeholder while the unincorporated US territory resolves
its manifold issues. Although preliminarily agreed upon, the
deal hinges on external factors and requires approval by
presiding Judge Laura Swain of the US District Court for the
Southern District of New York.
The deal is with a large group of General Obligation (GO)
bondholders that Puerto Rico issued as well as holders of
certain GO-guarantee credits. The most significant holder of
these is the Public Building Authority.
US bankruptcy law states that two thirds of a class of
bondholders need to be able to agree to a bankruptcy deal
before it can be confirmed. The oversight board has been
negotiating with the bondholders to get them to vote in favour
of this arrangement.
Kyle Rifkin, restructuring officer and deputy...