WASHINGTON, July 1 Prices on bonds sold by Puerto Rico's struggling power authority plummeted on Tuesday as debt holders worried about receiving a payment scheduled for July 1.
The junk-rated Puerto Electric Power Authority (PREPA) bonds sold for 38.625 cents on the dollar in light afternoon trading, equal to a 14.243 percent yield.
The island's Government Development Bank has delivered funds to the bond trustee to cover the approximately $204 million in principal and $179 million in interest due. But the trustee could hold on to the money if it sees large expenses looming.
PREPA is considered likely to take advantage of a new Puerto Rico law allowing public corporations to refinance their debts as it faces expiring lines of credit, rising fuel prices and a cash crunch. The situation could rack up costs for the independent authority.
Since the law was passed, PREPA's prices have fallen, reaching a record low of 36.875 cents on Monday, for a yield of 14.864 percent. The debt started trade Tuesday morning at 44.25 cents, for a yield of 12.561 percent. (Reporting By Lisa Lambert; Editing by Chizu Nomiyama)