Ricardo Rosselló. (Ramón “Tonito” Zayas)

Yesterday, the Puerto Rican government completed the debt renegotiation process of the Government Development Bank (GDB), a transaction that will reduce by 45 percent the amount owed by the inoperative public corporation.

In the coming days, the new government entity that manages these bonds, the GDB Debt Recovery Authority, will exchange the old GDB bonds for the restructured bonds. Through the transaction, each bondholder will receive $550 in new bonds, for every $1,000 they had in the old investment instruments.

"This is final and firm. This represents about $1.9 billion in savings in bonds, about $6 billion in deposits and for mayors - who had a pending payment by the end of this fiscal year - represents a savings of $55 million on what they had to pay," Governor Ricardo Rosselló Nevares highlighted in an interview with El Nuevo Día.

This is the first debt restructuring completed under the processes established by PROMESA. Specifically, under Title VI statute provisions that allow a voluntary debt adjustment without the direct intervention of a court. About $3.8 billion in debt issued by the GDB were renegotiated.

"It shows that here you can reach agreements, restoring credibility, which is so important in this whole process," said Rosselló Nevares.

According to the governor, the GDB debt renegotiation and the similar agreement reached for the debt of the Sales Tax Financing Corporation (Cofina, Spanish acrnoym), which has not been approved yet, will speed up other debt adjustment processes.

Although the Oversight Board, in the latest version of the fiscal plan, estimates a larger surplus than the previous ones - which has been interpreted as an intention to repay a larger portion of the public debt - the government funds are limited, warned the governor.

One of the criticisms to the agreement with Cofina bondholders is that it imposes a payment schedule that is not in line with the economic growth projections. Why do they endorse something like that?

-I believe that all these changes (the government reforms they have promoted) should motivate us to understand that we have to make adjustments in different areas. We are already leading the transformation in education, the power grid, labor laws, among other areas that we believe will benefit and it will put a stop or reduce the population exodus and will allow people to come to the island. I do not concur with this gloomy scenario, and, if that were the case, what happens is that you put yourself in a more limited position to renegotiate another debt.

How much are you setting aside for the payments of the rest of the debts with the bondholders? If you do not cut enough debt, it will not be enough for everyone...

- As one reaches agreements, and there is a somewhat more limited capital left based on the expectation of the surplus, that supposes a more limited scenario for the other creditors, so they should be willing to renegotiate. I think that's part of all this. I do not want to go into detail. There are some larger creditors, some smaller and others with different considerations. We are developing strategies to achieve, with the will of the creditors, agreements that allow us to govern being fiscally responsible and with all the services that have to be supplied and, at the same time, making the payments.

Do you think these negotiations will motivate smaller bondholders to seek faster deals?

-They should lead those who remain, to negotiate faster and look for alternatives or if not, at some point, this will come to the consideration of the judge.                                                                                                                                    

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