(Corrects company name in paragraph 2 to National Public Finance Guarantee Corp, not National Public Financial Guaranty)
NEW YORK, Jan 28 (Reuters) - Puerto Rico is negotiating with at least two bond insurers to insure around $500 million of a planned $2 billion bond issue, a move that would extend the appeal of the sale beyond the hedge funds currently buying the U.S. commonwealth's debt, according to two sources close to the process.
The island's Government Development Bank (GDB) is in talks with MBIA's National Public Finance Guarantee Corp and Assured Guaranty, the sources said. The insurers already have substantial exposure to Puerto Rico's debt and may be trying to protect their exposure in other areas by helping Puerto Rico raise more money.
The insured part of the deal would have a coupon of 5 percent, the sources said. Assured Guaranty and MBIA did not immediately respond to a request for comment. (Reporting by Edward Krudy; Editing by Chris Reese)