SAN JUAN, Puerto Rico (AP) — A federal control board that oversees Puerto Rico’s finances announced Wednesday that it has reached an agreement in principal with creditors to reduce a portion of the U.S. territory’s more than $70 billion public debt load.
The board said the tentative deal followed a mediation process with creditors holding some $7 billion worth of general obligation and Public Building Authority bonds issued by the U.S. territory.
“What we achieved at this point is a realistic proposal that will open a path to recovery from bankruptcy,” said board chairman David Skeel.
As a result, the board asked a federal judge overseeing Puerto Rico’s bankruptcy-like process for an extension to file an amended plan of adjustment.
Gov. Pedro Pierluisi said that while details of the agreement have not been made public because the mediation process is still ongoing, he believes that the economic terms are feasible. However, he reiterated that he would not support a plan that calls for any pension cuts or adjustments.
The announcement comes as Puerto Rico continues to restructure a portion of its debt, accumulated after decades of mismanagement and excessive borrowing to balance budgets. The territorial government declared the debt was unpayable in 2015 and two years later filed for the biggest municipal bankruptcy in U.S. history.