A pair of big bond insurers with more than $10 billion of exposure to Puerto Rican debt have hired restructuring advisers as the commonwealth continues on a path toward a reckoning with creditors.
MBIA is working with financial advisers from The Blackstone Group, according to two sources with knowledge of the matter. Assured Guaranty has hired professionals from investment bank Houlihan Lokey, Assured's spokeswoman, Ashweeta Durani, confirmed.
The hirings are the latest sign that Puerto Rico's debt crisis appears to be moving toward a restructuring, even as some bondholders have challenged the constitutionality of a law that would allow certain of the commonwealth's public agencies to refinance their debt.
Puerto Rico is being advised by well-known New York-based restructuring lawyers, who helped write the law, and distressed debt investors have begun snapping up the commonwealth's high-yield debt.
The move by MBIA and Assured to hire advisers comes as concerns grow about the exposure the bond insurers have to long-struggling Puerto Rico and its public corporations, the island's electric authority in particular.
A spokesperson for MBIA did not immediately return a call.
Earlier on Monday, the Puerto Rico Electric Power Authority, or PREPA, struck a deal with bank lenders providing it revolving lines to allow it to delay until July 31 certain payments that are currently due.
In addition to at least $671 million in bank loans, PREPA has some $8.8 billion of bonds oustanding. In all, Puerto Rico and its agencies are around $73 billion in debt.