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Puerto Rico Rejects Loan Offers, Accusing Hedge Funds of Trying to Profit Off Hurricanes

A bicyclist rides down a damaged road in Toa Alta, west of San Juan, Puerto Rico. PHOTO: Wired/Ricardo Arduengo/AFP/Getty

By David Dayen | 28 September 2017

THE INTERCEPT — Puerto Rico has rejected a bondholder group’s offer to issue the territory additional debt as a response to the devastation from Hurricane Maria. Officials with Puerto Rico’s Fiscal Agency and Financial Advisory Authority said the offer was “not viable” and would harm the island’s ability to recover from the storm.

The Prepa (Puerto Rico Electric Power Authority) Bondholder Group made the offer on Wednesday, which included $1 billion in new loans, and a swap of $1 billion in existing bonds for another $850 million bond. These new bonds would have jumped to the front of the line for repayment, and between that increased value and interest payments after the first two years, the bondholders would have likely come out ahead on the deal, despite a nominal $150 million in debt relief.

Indeed, the offer was worse in terms of debt relief than the one the bondholder group made in April, well before hurricanes destroyed much of the island’s critical infrastructure.

Puerto Rico’s Fiscal Agency and Financial Advisory Authority suggested that profit motive rather than altruism was the bondholder group’s real goal. “Such offers only distract from the government’s stated focus and create the unfortunate appearance that such offers are being made for the purpose of favorably impacting the trading price of existing debt,” the agency said in a statement. […]

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  • Roy Hobs

    Was watching coverage and there was a Puerto Rican who was complaining there was NO WATER, but about 20 feet from her was a river. Unbelievable how humanity has to have their butt wiped by everyone else other then themselves.

    • siriusthecat

      Water comes in bottles with a cup of ice and a lemon wedge. She’s not an animal, lol.

  • Roy Hobs

    Ironic that just prior to the hurricane, PR was crying for Independence. Think they will continue? Gotta get that FEMA money.