Puerto Rico debt slumps on downgrades, new law

Puerto Rico public corporation debt slumped on Friday after a new law that allows agencies to restructure their debts sparked fears of an imminent default and led to a slew of downgrades on the electricity, highway and water authorities.

Debt of the Puerto Rico Electric Power Authority (PREPA) maturing in 2040 and carrying a coupon of 5.25 percent traded with an average price of 45.956 cents on the dollar and an average yield of 12.139 percent, according to Thomson Reuters data.

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On Friday afternoon, PREPA's executive president, Alberto Lazaro, said the agency does not foresee restructuring its debt.

"It is our understanding that in PRASA there does not exist any condition that would lead us to think about restructuring our debt. We don't have the need to use the tools provided by the Recovery Act,'' Lazaro said in a statement.

—By Reuters