Bloomberg: Puerto Rico Set to Reduce Development Bank’s Debt

Puerto Rico is set to make its first debt exchange since collapsing into bankruptcy in 2017, Bloomberg reports. Government Development Bank will exchange its bonds for $2.6 billion of new securities and around $4 billion of the bank’s debt will be restructured under the transaction. The article notes that Puerto Rico will likely have to make several exchanges in order to reduce the $74 billion of debt sold by various arms of the island. The government-sponsored bank, which also served as the island’s fiscal adviser, extended loans meant to deal with operating deficits experienced by the commonwealth and its agencies. The economy continued to shrink, and these loans contributed to its over-borrowing. Although the exchange is aimed at resolving the island’s debt crisis, the bond document notes the risks and uncertainty associated with the restructuring.

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