Puerto Rico in bankruptcy deal with unsecured creditors

Bonds

Puerto Rico’s financial oversight board struck a bankruptcy deal with the main group of the island’s unsecured creditors, a breakthrough that promises to make it easier to win final court approval of its plan for cutting $35 billion of the government’s debt.

The board and the unsecured creditors reached the understanding on Monday, Brian Rosen, a lawyer at Proskauer Rose LLP, told U.S. Judge Laura Taylor Swain during a hearing Tuesday. The deal may put pressure on the remaining bond insurers that are among the last still fighting a proposed debt-restructuring plan.

A new deal between Puerto Rico’s oversight board and creditors may ease the way to a court-approved debt restructuring.

Bloomberg News

At the hearing, Puerto Rico and creditors are discussing the island’s plan for restructuring the last major chunks of debt to be dealt with in the four-year-long bankruptcy, including the government’s general-obligation bonds.

On the eve of the hearing, Puerto Rico and the unsecured creditors reached an agreement that would increase their payouts to $575 million from $125 million, Rosen said.

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