{"id":99503,"date":"2017-10-02T12:01:02","date_gmt":"2017-10-02T11:01:02","guid":{"rendered":"https:\/\/www.transcend.org\/tms\/?p=99503"},"modified":"2017-09-30T18:17:33","modified_gmt":"2017-09-30T17:17:33","slug":"puerto-rico-rejects-loan-offers-accusing-hedge-funds-of-trying-to-profit-off-hurricanes","status":"publish","type":"post","link":"https:\/\/www.transcend.org\/tms\/2017\/10\/puerto-rico-rejects-loan-offers-accusing-hedge-funds-of-trying-to-profit-off-hurricanes\/","title":{"rendered":"Puerto Rico Rejects Loan Offers, Accusing Hedge Funds of Trying to Profit Off Hurricanes"},"content":{"rendered":"
\"\"<\/a>

Power lines are knocked over by the winds of Hurricane Maria in Utuado, Puerto Rico on September 21, 2017.
Photo: David Villafane\/GFR\/AP<\/p><\/div>\n

28 Sep 2017 – <\/em>Puerto Rico has rejected a bondholder group\u2019s offer<\/a> to issue the territory additional debt as a response to the devastation of Hurricane Maria. Officials with Puerto Rico\u2019s Fiscal Agency and Financial Advisory Authority said the offer was \u201cnot viable\u201d and would harm the island\u2019s ability to recover from the storm.<\/p>\n

The PREPA (Puerto Rico Electric Power Authority) Bondholder Group made the offer on Wednesday, which included $1 billion in new loans, and a swap of $1 billion in existing bonds for another $850 million bond. These new bonds would have jumped to the front of the line for repayment, and between that increased value and interest payments after the first two years, the bondholders would have likely come out ahead on the deal, despite a nominal $150 million in debt relief.<\/p>\n

Indeed, the offer was worse in terms of debt relief than one the bondholder group made in April, well before hurricanes destroyed much of the island\u2019s critical infrastructure.<\/p>\n

Puerto Rico\u2019s Fiscal Agency and Financial Advisory Authority suggested that profit motive rather than altruism was the bondholder group\u2019s real goal. \u201cSuch offers only distract from the government\u2019s stated focus and create the unfortunate appearance that such offers are being made for the purpose of favorably impacting the trading price of existing debt,\u201d the agency said in a statement.<\/p>\n

Thomas Wagner of Knighthead Capital Management, one of the members of the bondholder group, admitted as much<\/a> on Bloomberg TV yesterday, saying \u201cWhat we\u2019re trying to do is lend where our investors are not disadvantaged.\u201d He added that the loan could be a \u201cwin-win\u201d for the utility and the bondholders, \u201cwhere the capital is not expensive.\u201d<\/p>\n

If the idea was to increase the value of PREPA bonds, that hasn\u2019t really happened. The bonds were trading at 43.4 cents on the dollar Wednesday according to Bloomberg<\/a>. Prices were at 52.5 cents in late August.<\/p>\n

Hurricane Maria, and Irma before it, left Puerto Rico in shambles, particularly the electric utility. The island\u2019s 3.4 million residents were without power in the immediate aftermath of the storm, and most continue without power today. PREPA has limited ability to restore the grid, given the island\u2019s cash-strapped status.\"\"<\/a><\/p>\n

Creditor groups should \u201crefrain from making unsolicited financing offers at the expense of the people of Puerto Rico,\u201d the fiscal agency said.<\/p>\n

Despite growing calls for debt relief, no bondholder has said they would supply it in the days following the storm, nor have creditor lawsuits been withdrawn. However, David Tepper, the hedge fund manager behind Appaloosa LP, did pledge $3 million for hurricane relief<\/a> from his family charity and the hedge fund. The money would go to Feeding America, a food bank network.<\/p>\n

Tepper\u2019s Appaloosa LP is the only non-bank creditor to so much as publicly donate to disaster recovery efforts. Three banks who hold Puerto Rican debt have donated $1.25 million.<\/p>\n

\n

The list of creditors:<\/strong><\/h3>\n

Angelo, Gordon & Co<\/strong>. \u2013 Member of Prepa Bondholders Group, offered $1.85 billion in DIP loans and $150 million in debt relief<\/p>\n

Appaloosa Management<\/strong> \u2013 Offered\u00a0$3 million for hurricane relief<\/p>\n

Archview Investment Group<\/strong> \u2013 no response<\/p>\n

Ambac<\/strong> \u2013 no response<\/p>\n

Aristeia Capital<\/strong> \u2013 no response<\/p>\n

Arrowgrass Capital Partners<\/strong> \u2013 no response<\/p>\n

Assured Guaranty<\/strong> \u2013 Member of Prepa Bondholders Group, offered $1.85 billion in DIP loans and $150 million in debt relief<\/p>\n

Aurelius Capital Management<\/strong> \u2013 no response<\/p>\n

Avenue Capital Group<\/strong> \u2013 no response<\/p>\n

BlueMountain Capital Management<\/strong> \u2013 Member of Prepa Bondholders Group, offered $1.85 billion in DIP loans and $150 million in debt relief<\/p>\n

Brigage Capital Management<\/strong> \u2013 no response<\/p>\n

Candlewood Investment Group<\/strong> \u2013 no response<\/p>\n

Canyon Capital Partners<\/strong> \u2013 no response<\/p>\n

Carmel Asset Management<\/strong> \u2013 no response<\/p>\n

Centerbridge Partners<\/strong> \u2013 no response<\/p>\n

Cyrus Capital Partners<\/strong> \u2013 no response<\/p>\n

Citibank<\/strong> \u2013 Donated $250,000 to the Red Cross.<\/p>\n

D.E. Shaw<\/strong> \u2013 no response<\/p>\n

DoubleLine Capital<\/strong> \u2013 no response<\/p>\n

Farallon Capital Management<\/strong> \u2013 no response<\/p>\n

FGIC<\/strong> \u2013 no response<\/p>\n

Fir Tree Partners<\/strong> \u2013 no response<\/p>\n

Fortress Investment Group<\/strong> \u2013 no response<\/p>\n

Franklin Templeton Investment Co.<\/strong> \u2013 Member of Prepa Bondholders Group, offered $1.85 billion in DIP loans and $150 million in debt relief<\/p>\n

Fundamental Advisors<\/strong> \u2013 no response<\/p>\n

Golden Tree Asset Management<\/strong> \u2013 no response<\/p>\n

Goldman Sachs<\/strong> \u2013 Gave $500,000 to \u201corganizations assisting in immediate search, clean-up and recovery efforts\u201d in the Caribbean after Hurricane Irma.<\/p>\n

Highbridge Capital Management<\/strong> \u2013 no response<\/p>\n

Knighthead Capital Management<\/strong> \u2013 Member of Prepa Bondholders Group, offered $1.85 billion in DIP loans and $150 million in debt relief<\/p>\n

Mackay Shields<\/strong> \u2013 declined to comment<\/p>\n

Maglan Capital<\/strong> \u2013 no response<\/p>\n

Marathon Asset Management<\/strong> \u2013 Member of Prepa Bondholders Group, offered $1.85 billion in DIP loans and $150 million in debt relief<\/p>\n

MatlinPatterson Global Advisors<\/strong> \u2013 no response<\/p>\n

MBIA<\/strong> \u2013 no response<\/p>\n

Meehan Combs<\/strong> \u2013 fund shut down<\/p>\n

Merced Capital<\/strong> \u2013 no response<\/p>\n

Monarch Alternative Capital<\/strong> \u2013 no response<\/p>\n

Och-Ziff Management<\/strong> \u2013 no response<\/p>\n

Oppenheimer Funds Co.<\/strong> \u2013 Member of Prepa Bondholders Group, offered $1.85 billion in DIP loans and $150 million in debt relief<\/p>\n

Perry Capital Management<\/strong> \u2013 fund shut down<\/p>\n

Principal Global<\/strong> \u2013 no response<\/p>\n

Redwood Capital Management<\/strong> \u2013 no response<\/p>\n

Scotiabank<\/strong> \u2013 gave $500,000 for Hurricane Irma relief in the Caribbean.<\/p>\n

Sound Point Capital Management<\/strong> \u2013 no response<\/p>\n

Stone Lion Capital Partners<\/strong> \u2013 no response<\/p>\n

Syncora<\/strong> \u2013\u00a0no response<\/p>\n

Taconic Capital Partners<\/strong> \u2013 no response<\/p>\n

Tilden Park Capital Management<\/strong> \u2013 no response<\/p>\n

V\u00e5rde Partners<\/strong> \u2013 no response<\/p>\n

Whitebox Advisors<\/strong> \u2013 \u201cWe have a policy of not discussing Puerto Rico or any securities in which we are involved.\u201d<\/p><\/blockquote>\n

___________________________________________________<\/p>\n

\"\"<\/a>David Dayen<\/a> – david.dayen@\u200bgmail.com<\/a><\/em><\/p>\n

 <\/p>\n

 <\/p>\n

 <\/p>\n

Go to Original \u2013 theintercept.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

28 Sep 2017 – The PREPA Bondholder Group offered $1 billion in new loans and a swap of $1 billion in existing bonds for another $850 million bond. Despite growing calls for debt relief, no bondholder has said they would supply it in the days following the storm, nor have creditor lawsuits been withdrawn.<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[55],"tags":[],"class_list":["post-99503","post","type-post","status-publish","format-standard","hentry","category-capitalism"],"_links":{"self":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/99503","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/comments?post=99503"}],"version-history":[{"count":0,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/99503\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/media?parent=99503"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/categories?post=99503"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/tags?post=99503"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}