Four of the five Puerto Rico authorities whose revenues were diverted to pay Government Development Bank of Puerto Rico notes on Dec. 1 are expected to make their own bond payments on Jan. 1, according to the GDB.
The exception may be the Puerto Rico Infrastructure Finance Authority, a GDB spokeswoman said. PRIFA has $46.7 million due on Jan. 1 according to data compiled by JPMorgan.
On Dec. 1 Puerto Rico diverted revenues to help the GDB make a commonwealth-guaranteed notes payment. The revenues were diverted from bond sinking funds from PRIFA, the Puerto Rico Highways and Transportation Authority, the Metropolitan Bus Authority, the Integrated Transportation Authority, and the Convention District Authority. The latter four have sufficient reserves to make payments on their debt through June, the spokesperson said, clarifying a comment attributed to GDB president Melba Acosta Febo in the El Vocero news website.
Bond documents show that PRIFA may not have funds for the January payment.
An appendix in the official statement to Series 2005 PRIFA bonds stated, "In connection with the issuance of the 1997A and 1997B bonds, the trust agreement was amended to eliminate the requirement that the authority establish and maintain a reserve account in the sinking fund with respect to any bonds issued under the trust agreement, other than the series 1988A bonds remaining outstanding."
The official statement for the authority's Series 2005 bonds said that the last of the authority's bonds with reserves would mature on July 1, 2005. The Series 2005 bonds had no debt service reserves, according to this statement.
At least some of PRIFA's Jan. 1 payment is insured by Ambac Assurance Corp. Ambac did not immediately provide a comment.
According to JPMorgan data on debt due on Jan. 1, the Puerto Rico Highways and Transportation Authority owes $105.7 million and the Convention District Authority owes $9.5 million. There is no mention of the Metropolitan Bus Authority or the Integrated Transportation Authority.
The Puerto Rico Electric Power Authority, which wasn't subject to the revenue "clawback" and is in negotiations with its creditors, also has a payment coming due.
PREPA owes $183.6 million on Jan. 1, according to the JPMorgan data. On July 1 it made a $415 million bond payment by drawing money from its debt service reserve and from its general fund. In addition, later in July its bond insurers Assured Guaranty, Syncora Guarantee, and National Public Finance Guarantee, purchased $128 million in new short-term bridge bonds.
While PREPA has since reached agreements with its holders of lines of credit, the GDB, and holders of the majority of par value of its bonds, it has not yet reached an agreement with its bond insurers. Failure to reach an agreement with these insurers may lead to a monetary default on its bonds on Jan. 1. Some of this debt may be insured.
PREPA declined to comment on whether the Jan. 1 payment will be made.
The last major Puerto Rico authority, the Puerto Rico Aqueduct and Sewer Authority, has been doing better than its own projections recently and is not expected to default on the $82.3 million it has due.
In addition, the Public Buildings Authority is scheduled to pay $85.1 million and the Housing Finance Authority is scheduled to pay $0.8 million.
