UPDATE 5-Puerto Rico seeks huge debt haircut, creditors frustrated

lunes 1 de febrero de 2016 21:52 GYT

* Deal would slash outstanding debt by $23 billion

* Proposed "growth bond" generates skepticism on payout

* Shares of bond insurer Ambac fall (Adds Bishop quote)

By Megan Davies and Nick Brown

NEW YORK/SAN JUAN, Feb 1 (Reuters) - Puerto Rico asked its creditors to take a huge "haircut" that would slash its total outstanding debt by about $23 billion in an opening salvo to resolve a crippling debt crisis, but creditors reacted with frustration, calling the offer "not credible," "not serious" and a "trial balloon."

With $70 billion in debt, a 45 percent poverty rate and a steady exodus of its population to the mainland, the U.S. territory is trying to crawl out of an economic swamp before substantial debt payments come due in May and July. Puerto Rico has already defaulted on some debt and is trying to persuade its creditors to take concessions.

"We do not view this proposal as a serious effort," said Nader Tavakoli, president and chief executive officer of bond insurer Ambac, which insured $2.2 billion net par, or original face value, of bonds as of the end of November. Ambac recently sued Puerto Rico over a debt default.

The plan announced on Monday would reduce a $49.2 billion chunk of debt by about 46 percent, to $26.5 billion, by offering creditors payout reductions under a new, "base bond" with better legal protections. The cut to creditors was earlier reported by Reuters.

Creditors could have an opportunity to make up the difference in face value through a $22.7 billion "growth bond," whose payout would be dependent on future expansion, but there was skepticism about this structure.   Continuación...