PREPA bond parties appeal lien, other rulings

BY SourceMedia | MUNICIPAL | 12/01/23 01:55 PM EST By Robert Slavin

Puerto Rico Electric Power Authority bondholder GoldenTree Asset Management and bond insurer Syncora Guarantee gave notice they will appeal several PREPA bankruptcy decisions.

The appeal, announced Thursday, covers all "interlocutory orders merging into the final judgment," issued by U.S. District Judge Laura Taylor Swain Tuesday for an adversary proceeding that the Oversight Board filed in 2019. These included rulings on revenue lien and recourse issues made in March, unsecured net revenue claim estimation in June, a joint stipulation resolving perfection-related issues from August, and an order on Tuesday dismissing five other bond party arguments.

The bond parties are appealing to the First Circuit Court of Appeals.

Puerto Rico Attorney John Mudd said the bond parties are wise in filing the appeal now, and may ask for an expedited appeal.

The Puerto Rico Oversight Board, Fiscal Agency and Financial Advisory Authority, Unsecured Creditors Committee, and National Public Finance Guarantee didn't immediately respond to a request for comment.

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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