Fitch downgrades Liberty Communications of Puerto Rico LLC

Fitch downgrades Liberty Communications of Puerto Rico LLC

A significant hurdle has emerged in the debt restructuring process for Puerto Rico's ailing power company, the Electric Power Authority (EPA). The plan to restructure over $9 billion in debt has encountered a major obstacle after a group of bondholders terminated their deal with the federal control board overseeing the U.S. territory's finances [1][2].

The proposed restructuring would have allowed Puerto Rico's government to pay creditors $2.6 billion, a substantial reduction from the $8.5 billion demanded by some bondholders. BlackRock Financial Management and other investment funds had initially agreed to this deal and its subsequent amendments two years ago. However, they withdrew their support following the Trump administration's termination of almost the entire federal control board overseeing debt negotiations.

On Monday, bondholder groups that had opposed the board's proposals filed a document noting that BlackRock and other funds were joining them in a new deal that would become effective on October 1. This enlarged group now holds or insures nearly 90% of the outstanding bonds issued by Puerto Rico's power company [1][2].

Experts suggest that the dismissal of the majority of the board could lead to the appointment of new members who might be more favorable to hedge funds seeking full repayment. Earlier this year, the board's executive director stated that it was "impossible" for Puerto Rico to pay the $8.5 billion demanded by some bondholders [1][2].

Puerto Rico currently has one of the highest power bills in any U.S. jurisdiction. If a debt restructuring deal is not reached with bondholders, residents could face a massive rate hike to pay off the EPA's debt. A spokesperson for the board declined to comment, and it remains unclear how quickly new board members will be appointed.

The board was established in 2016 under the Obama administration, following Puerto Rico's declaration of its inability to pay its over $70 billion public debt load and subsequent filing for the biggest municipal bankruptcy in U.S. history [1][2].

References:
[1] https://finance.yahoo.com/news/deal-restructure-puerto-rico-power-192050281.html
[2] https://www.newsmax.com/world/globaltalk/puerto-rico-power-company-debt-board-blackrock/2025/08/26/id/1224059/