A couple of weeks ago, most PR bonds (G/O and PBA) were converted to a slew of other bonds, plus cash. This is as part of the settlement to get PR out of bankruptcy.
Puerto Rico’s direct debt will be reduced to $7.4 billion from $34.3 billion. General obligation (GO) and public building authority (PBA) bondholders will receive $7.4 billion in new GO bonds and a $7 billion cash consideration. An additional contingent value instrument (CVI) will allow creditors to benefit from a portion of the outperformance in sales tax collections as well. Annual debt service (inclusive of COFINA sales tax bonds) will be reduced to $1.15 billion from $4.2 billion, an over 70% reduction.
From EMMA (MSRB), here are the information docs for the replacement bonds:10 coupon (current interest) bonds and 2 zero (capital appreciation) bondsCVI bonds
Bonds (other than the CVI) that mature in 2033 or later are callable.
I held one G/O bond. It wasn't until today that the transactions and figures for the 13(!) bonds added up. This could have been confusion on the PR end, or it could have been poorly recorded by my broker's clearing house (Pershing).
For example, early on the broker was reporting a 100% loss on the original bond, meaning that there were zero proceeds. Yet there were proceeds - part used to pay the cash (mentioned in the Nuveen piece, above), and part used to pay for the bakers dozen bonds that were issued as replacements.
Has anyone else had a bond replaced? Do your broker's figures make any better sense?