Puerto Rico unveils new restructuring deal as cash dwindles

SAN JUAN, Puerto Rico (AP) — Puerto Rico's government released a new proposal Monday for restructuring part of its $70 billion debt to buy time to implement a fiscal plan as multimillion-dollar payments loom for the U.S. territory facing dwindling cash reserves.

Government officials proposed to exchange $49 billion of debt into up to $28 billion of base bonds and nearly $2 billion of tax-exempt capital appreciation bonds.

David Tawil, co-founder and portfolio manager of New York-based Maglan Capital, said bondholders would likely not consider the deal aggressive enough, but said it was a smart move by government officials amid uncertainty of how courts and U.S. Congress will respond to the island's economic crisis.

A group of investors and the Assured Guaranty insurance company, which together hold nearly $6.5 billion worth of general obligation bonds, have offered to defer repayment of nearly $2 billion in principal for the next five years to help the island avoid a default in July.

The move means in part that officials will only allow withdrawals to fund necessary costs for health, public safety and education services.