Puerto Rican legislators gave approval Thursday to a final agreement for restructuring bonds from the Sales Tax Financing Corp., known as COFINA.
The COFINA restructuring agreement was filed Oct. 19 in the court overseeing Puerto Rico’s bankruptcy, under Title III of the Puerto Rico Oversight, Management and Economic Stability Act. The just-passed legislation supports the plan, which restructures all $17.6 billion of COFINA debt and represents 24% of Puerto Rico’s total bonded debt.
The COFINA agreement, supported by bondholders and bond insurance companies, is the first debt adjustment plan headed for court approval. It still has to be approved by U.S. District Court Judge Laura Taylor Swain before it goes into effect in January.
The deal reduces COFINA debt overall by 32% and gives senior bondholders 93% of the value of the original bonds and junior bondholders 55%. It also saves Puerto Rico about $17.5 billion in debt service, and enables local retail bondholders in Puerto Rico to receive a significant recovery, according to the Financial Oversight and Management Board for Puerto Rico created by PROMESA.
Natalie Jaresko, the board’s executive director, welcomed the Legislature’s action, which she said advances the objectives outlined in PROMESA to regain access to capital markets and help toward economic recovery.