Puerto Rico Electric Power Bonds Fall on Proposed Debt Deal
Puerto Rico Electric Power Authority (PREPA) bonds fell on Tuesday after the government proposed a debt restructuring plan that would reduce the utility’s debt by $2.2 billion. The plan, which was announced on Monday, would reduce the utility’s debt from $9 billion to $6.8 billion.
Background of PREPA
PREPA is the largest public utility in Puerto Rico and provides electricity to more than 1.5 million customers. The utility has been struggling financially for years, and its debt has been a major source of concern for the government. In 2017, the utility declared bankruptcy and has been in negotiations with creditors ever since.
Details of the Proposed Debt Deal
Under the proposed debt deal, PREPA would reduce its debt by $2.2 billion. The deal would also extend the maturity of the debt from 2023 to 2027. In addition, the deal would reduce the interest rate on the debt from 8.5% to 6.5%.
Reaction to the Proposed Debt Deal
The proposed debt deal has been met with mixed reactions. Some creditors have expressed support for the deal, while others have expressed concern that the deal does not go far enough to reduce the utility’s debt.
Impact on Bond Prices
The proposed debt deal has had an immediate impact on the prices of PREPA bonds. On Tuesday, the prices of PREPA bonds fell by as much as 5%. The decline in bond prices is a sign that investors are concerned about the proposed debt deal and are not confident that it will be enough to reduce the utility’s debt.
Government’s Plan to Reduce PREPA’s Debt
The government has proposed a number of measures to reduce PREPA’s debt. These measures include a rate increase for customers, a reduction in operating costs, and the sale of some of the utility’s assets. The government has also proposed a debt restructuring plan that would reduce the utility’s debt by $2.2 billion.
Conclusion
The proposed debt deal for PREPA has been met with mixed reactions. The deal would reduce the utility’s debt by $2.2 billion and extend the maturity of the debt from 2023 to 2027. The proposed deal has had an immediate impact on the prices of PREPA bonds, which have fallen by as much as 5%. The government has proposed a number of measures to reduce PREPA’s debt, but it remains to be seen if these measures will be enough to reduce the utility’s debt.