Reorg on the Record: Puerto Rico exited its historic Title III restructuring… (04/13/22)

Written by Seth Brumby, Deputy Managing Editor, Americas Municipals by Reorg || After almost five years, the commonwealth of Puerto Rico exited its historic Title III restructuring in March, coincident with one of the worst municipal bond market performances in recent memory. As almost $16.1 billion in restructured general obligation and contingent value instruments broke for trading on March 15, the municipal market more broadly was on track for a loss of 6.2% in the first quarter of 2022. Continued outflows from the municipal bond market were the primary culprit in the underperformance, driven largely by the Federal Reserve’s campaign to tame inflation by aggressively raising rates. Pockets of performing opportunities still exist, as does a growing pipeline of distress, particularly in senior life plan communities.

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The company’s latest unsecured bond prices, at around 50, according to Solve Advisors, imply that its reorganized equity market valuation upon emergence from chapter 11 would be roughly half of the company’s estimated plan valuation. The reorganized company, which expects to emerge from chapter 11 later this month, would have a debt load, when including the aggregate amount of future settlement payments, approximately $100 million higher than the funded debt total at petition. » Continue Reading

U.S. Virgin Islands
U.S. District Judge Robert Molloy has dismissed with prejudice the U.S. Virgin Islands Government Employees’ Retirement System’s, or GERS’, suit against the government of the Virgin Islands. In an order on Friday, April 8, the judge granted the parties’ joint motion to terminate the consent judgment related to the government’s statutorily required payroll deductions to GERS in light of the recent enactment of Act 8540. » Continue Reading

The Senate Banking Committee held a hearing to consider the nomination of Paul Rosen to be assistant secretary for investment security at the U.S. Department of the Treasury, a position that oversees the work of CFIUS. In prepared testimony Rosen said, “As technology advances at warp speed and the intentions and capabilities of our adversaries expand, CFIUS, and the talented career public servants who support it, are a critical gatekeeper in protecting the United States from malign foreign investment while continuing to promote an open investment climate.” » Continue Reading

Puerto Rico, PROMESA
The proposed Territorial Relief Under Sustainable Transitions for Puerto Rico Act of 2022, or the TRUST for Puerto Rico Act, filed last week, seeks to expedite the termination of the PROMESA oversight board by changing the requisites for termination, and it also outlines the transfer of oversight board authority back to the commonwealth for any Title III and Title VI cases pending at the conclusion of the oversight board’s mandate. » Continue Reading

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