Puerto Rico unveils new restructuring deal as cash dwindles

SAN JUAN, Puerto Rico (AP) — Puerto Rico today released a new proposal to restructure part of its $70 billion debt to buy time to implement a fiscal growth plan as multimillion-dollar payments loom for a U.S. territory facing dwindling cash reserves.

Government officials propose to exchange $49 billion of debt into up to $28 billion of base bonds and nearly $2 billion of tax-exempt capital-appreciation bonds. Officials said the voluntary exchange proposal would allow creditors to recover the full principal they invested regardless of future economic growth rates.

The plan also includes a special clause for those who live in Puerto Rico and hold certain bonds. Officials said that group could receive up to $8 billion of local holder base bonds that repays the full principal they originally invested at a 2 percent interest rate.

Government officials said Puerto Rico could cut $12 billion to $16 billion from its debt load under the new deal. They said this would allow the government to keep providing essential services, pay back local vendors and suppliers, boost liquidity and fund retirement systems, among other things.