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Puerto Rico’s revised fiscal plan to be certified in days-governor
February 19, 2018
NEW YORK, Feb 15 (Reuters) – Puerto Rico Governor Ricardo Rossello said on Thursday that he expects the bankrupt island’s oversight board to certify his revised fiscal plan in “the next couple of days.”
Aimed at putting the U.S. territory on a path to economic recovery, Rossello’s latest plan, introduced on Tuesday, has already drawn opposition from a large group of creditors.
In an interview with Reuters, Rossello said his ability to address creditors’ broad concerns was limited by the Title III court restructuring process. That court case, or negotiations around it, will ultimately be used to hash out specific debt repayment terms, he said.
“But any particular concern … I will certainly address it because I have to address this plan publicly,” Rossello said, after speaking at a forum in New York aimed at attracting investors to the island.
“There is clarity on the (Title III) process. We are willing participants in this process,” he said. “I just can’t say, ‘X bondholder gets Y.’”
Following the release of the revised plan, which taps federal money and turns a deficit into a modest surplus, the price on Puerto Rico’s benchmark GO bond is on a third straight day of significant gains on heavy volume.
“We see continued strengthening across several Puerto Rico names, especially the 8 percent 2035 GO‘s. We are seeing further price appreciation based upon MSRB trade data and indicative bid/ask levels,” said Daniel DiBono, manager of municipal high yield evaluations at Thomson Reuters Pricing Service (TRPS).
“These bonds have traded as high as 32 cents on the dollar today, with nearly $80 million worth changing hands so far today. That is a continuation of a trend in heavy trading volume that started on Feb. 13,” he said.
The bond, trading in default without a yield, climbed 2.25 U.S. cents to 31.75 cents on the dollar. Sales tax-backed COFINA senior bonds gapped higher by 6.61 cents to trade at 55.50 cents.
“We want to get clarity as quickly as possible because it is in our best interest as well,” Rossello said. “Once it is decided how this is going to fall out, then we will have access to the markets. Until that happens, we won‘t.”
Rossello was in New York to ask the federally appointed oversight board to certify his recovery plan.
Rossello’s revised plan uses a newfound $18 billion of federal appropriations from the U.S. budget to help turn what would have been a deficit into a $3.4 billion surplus over six years.
Puerto Rico is struggling to recover from September’s Hurricane Maria – its worst storm in 90 years – while also navigating the biggest government bankruptcy in U.S. history, with $120 billion in combined bond and pension debt.
At the investor forum, Rossello told audience members that Puerto Rico needed to use the influx of cash “as an opportunity” and not “fall into the trap” like some other storm-ravaged places.
“In many other places money comes, people don’t see it. It has a little bump on the economy … but then the money goes,” he said. “The effect is not nearly as big as it should have been, and you are sometimes left off in a worse position. We are very cognizant of this.”