Puerto Rico bonds are in the midst of the biggest three-day rout since April 2016, when island officials advanced a moratorium bill that paved the way for the first default on its general-obligation debt, according to data compiled by Bloomberg.
As The FT reports, Puerto Rico plans to begin restructuring talks with its multitude of creditors “immediately” after its turnround plan was on Monday approved by the commonwealth’s federal oversight board, according to the island’s governor.
The next steps are implementing some of the promised economic reforms and to “aggressively pursue” restructuring talks with creditors, Puerto Rican governor Ricardo Rosselló told the FT.
“We will reach out to them immediately and move quickly,” he said. “This [turnround plan] sends a clear signal to the market that there is a paradigm change in our credibility compared to the last administration.”
And the reaction in Muni bonds is clear…
As the federal oversight board’s approval of a fiscal recovery plan Monday, covers less than a quarter of the debt payments due from 2018 through 2026, leaving bondholders facing steeper losses than they did under the governor’s previous proposal.