Bonds

PREPA judge rejects motion on payment capacity

The judge in the Puerto Rico Electric Power Authority bankruptcy rejected a bond party request that she consider new evidence of the authority’s ability to pay back debt.

U.S. District Judge Laura Taylor Swain released her three-paragraph ruling Wednesday afternoon.

Swain said the bondholders who asked her to consider new LUMA Energy projections of electricity needs, had used earlier versions of these projections in their arguments that PREPA could pay them more. LUMA Energy handles PREPA’s transmission and distribution of electricity.

Judge Laura Taylor Swain said bond parties had already presented their case that the Oversight Board electric projections were too pessimistic.

“The court is not persuaded that it is appropriate or necessary to reopen the fully submitted record to add evidence in furtherance of the PREPA bondholders’ extensively explored argument that the Oversight Board’s reliance on a load forecast consistent with commonwealth law and the 2023 fiscal plan should be rejected in favor of preliminary load projections by LUMA that are allegedly more optimistic,” Swain said.

Swain said the record is sufficient to let her “address properly the parties’ positions.” Additionally, she said the Puerto Rico Oversight Board and Fiscal Agency and Financial Advisory Authority’s arguments to not consider the new projections were generally convincing.

The plan of adjustment confirmation hearing ended in mid-March and the opposing bondholders submitted their request to hear the new evidence at the end of April. They said it showed PREPA could pay 58% more bond debt in the coming years than the board claimed.

The opposing bondholders making the request were Assured Guaranty Corp., Assured Guaranty Municipal Corp., PREPA bond trustee U.S. Trust, the PREPA Ad Hoc Group, GoldenTree Asset Management, and Syncora Guarantee.

Also on Wednesday, Swain approved Syncora Guarantee and GoldenTree Asset’s request to delay until a scheduled late July multi-topic hearing consideration of their motion to lift the stay that prevents the bond parties from seeking a receiver.

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