A small group of hedge funds are being rewarded for backing an $18 billion restructuring of Puerto Rico’s sales-tax debt that saddled other investors with losses, the Wall Street Journal reported.
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A U.S. federal judge yesterday approved a plan to restructure $17 billion of debt from Puerto Rico’s Sales Tax Financing Corporation, known as COFINA, marking the second deal between the bankrupt U.S. commonwealth and its creditors to win court approval, Reuters reported.
After shunning the U.S. territory for much of the past six years, municipal-bond mutual funds are again buying the Puerto Rico’s debt as it recovers from the 2017 hurricane and inches closer to winning a potential court approval to restructure more than $17 billion of sales-tax-backed debt, a major step in its record-setting bankruptcy, Bloomberg News reported.
Bondholders that own nearly $3 billion of debt issued by a Puerto Rico retirement system have a claim on the pension fund’s assets, a U.S. appellate court said yesterday, Reuters reported. The reversal of a district court ruling could complicate efforts by Puerto Rico’s federally created oversight board to restructure about $120 billion of the U.S.
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