The island commonwealth of Puerto Rico is looking at how Connecticut’s Foxwoods Resort Casino restructured its bond payments as a possible way of restructuring its own debt.
The Mashantucket Pequot Tribe, which owns the casino, was able to reduce its $2.3 billion by about 25 percent and lowered interest rates while extending its time to pay the loan back.
The commonwealth has a debt of $73 billion, but some of its leaders feel that the Pequot’s way of dealing with its debt is instructive.
According to Tom Metzold, of Eaton Vance Management, which oversees the debt, told Bloomberg last week, “If you go back to Foxwoods, they were of course a sovereign nation and were not eligible for bankruptcy, yet they were able to get all the various parties around the same table and come to an agreement as to how they were going to restructure the bonds.”
Puerto Rico last month sold $3.5 billion of tax-exempt general obligation bonds that will mature in July 2035, with a bond rating of BB+ by Standard & Poor’s. The island’s Governor Alejandro Garcia Padilla, vows to pay the island’s debtors in full and on time.
However, investors appear to be skeptical and since last year they have been factoring the price of a restructuring into the bonds’ price.
