Press Release

The Puerto Rico Fiscal Agency and Financial Advisory Authority (“AAFAF,” by its Spanish acronym) and the Puerto Rico Public Finance Corporation (“PFC”) announced that the U.S. District Court for the District of Puerto Rico approved the qualifying modification for PFC (the “Qualifying Modification”) under Title VI of the Puerto Rico Oversight, Management, and Economic Stability Act (“PROMESA”) and the Qualifying Modification has successfully been implemented. 

“The consummation of the PFC Qualifying Modification represents the settlement of PFC outstanding obligations at a significant discount and allows multiple Commonwealth agencies and public corporations to eliminate the PFC-related debt from their balance sheet. This adjustment is the result of extensive negotiations and the willingness to reach a consensual agreement with all parties,” said Omar J. Marrero Díaz, executive director of AAFAF. “This represents another significant step in restructuring the Commonwealth’s legacy debt and another key milestone for Puerto Rico’s return to the capital markets,” added Marrero.

The Qualifying Modification involves the restructuring of the following bonds issued by PFC: (i) Series 2011A Commonwealth Appropriation Bonds, (ii) Series 2011B Commonwealth Appropriation Bonds, and (iii) Series 2012A Commonwealth Appropriation Bonds (collectively, the “PFC Bonds”). The PFC Bonds are payable solely from payments of principal and interest on certain promissory notes (the “Notes”) issued by certain departments, agencies, instrumentalities, and public corporations of the Commonwealth of Puerto Rico, which Notes are payable solely from budgetary appropriations (if any) made by the Puerto Rico Legislative Assembly. 

The Qualifying Modification results in the discharge of the PFC Bonds at a discount of approximately 96 percent (including the DRA bonds, discussed below). The only new economic consideration provided by the Commonwealth or PFC to discharge the more than $1.5 billion of principal and unpaid interest of PFC Bonds is through payment of $13.8 million in cash. The remaining consideration, subject to and as provided under the Qualifying Modification, will be in the form of bonds issued by the GDB Debt Recovery Authority (the “DRA”) in the face amount of up to approximately $47 million, on the terms and conditions set forth in the Qualifying Modification.

The Qualifying Modification will also result in the release of all claims against the agencies and public corporations that issued the Notes. This will allow the Notes liability that is currently carried on the balance sheets of multiple government agencies and public corporations to be eliminated. The Plan’s implementation thus represents one more significant step in returning Puerto Rico to the capital markets.

The restructuring of PFC joins those of the Commonwealth, COFINA, HTA, ERS, GDB, PBA, PRIFA, and CCDA, among others. The Government looks forward to continuing to work constructively to advance the final stages of Puerto Rico’s debt restructuring efforts in the coming months.