NEW YORK Aug 19 Puerto Rico's benchmark general
obligation bonds rallied to their highest level in over three
months on Tuesday as investors bet the bonds will be not be
affected during a possible restructuring of the island's power
The general obligation bonds maturing in 2035 and carrying a
coupon of 8 percent traded at 91.101 cents on
Tuesday, up from 89.784 on Monday, and 7.8 percent above an
average low of 84.511 reached on July 6. The average price of
the bonds was last above Tuesday's high on May 9.
Tuesday's price corresponded to an average yield of 8.953
The power authority, known as PREPA, won creditors'
agreement last Thursday to extend $671 million of credit lines
it uses to buy oil until March. PREPA also agreed to meet a $209
million coupon payment to bondholders due on Jan. 15.
PREPA bonds rallied on the news that investors will get
another coupon payment. But they are still trading at distressed
levels, reflecting the view that bondholders will eventually
take losses when PREPA restructures.
The Government Development Bank said on Tuesday that duties
of a new chief restructuring officer position at PREPA, created
as part of the agreement with creditors, will include financial
restructuring. PREPA and bondholders must agree on the
appointment by Sept. 8.
PREPA bonds maturing in 2032 and carrying a 5 percent coupon
traded at an average price of 54.511 cents on
Tuesday, up from 50.893 cents during the previous session.
Tuesday's price was the highest average price for the bonds
since June 23.
(Reporting by Edward Krudy)