Haircuts on the debt would differ according to which bonds are being exchanged and would reflect the current trading of those bonds, the sources said, with general obligation bonds getting the best treatment, followed by COFINA bonds, subordinated COFINA bonds and then a slew of other bonds which are to be included in the offer.
The aggregate haircut across the structures would be around 45 percent, the sources said. Current trading of the bonds would indicate that general obligation debt would take a 30 percent haircut from the par value. General obligation bonds issued in 2014 are currently trading around 72 cents on the dollar.
The category of other bonds to be exchanged would include about a dozen issues, which include those supported by tax and legislative appropriations - such as bonds of highway authority HTA and infrastructure authority PRIFA and even PFC, which defaulted on its payments in August. It would exclude a handful of bonds including PREPA and aqueduct and sewer agency PRASA.
The plan may be greeted with skepticism by creditors, with one of the sources saying it was "uninviting" and noting it was premised on the island's financial projections, which some creditors believe are overly optimistic.
The newly-structured bonds would consist of a so-called 'base' bond and a 'hope' bond, the sources said, with the latter being a bet on the long-term health of the U.S. territory.