A Puerto Rico Bond Plan

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PUERA long-awaited plan that addresses Puerto Rico?s $72 billion debt load will include projections of how much debt-service the island can pay over the next five years, according to a person with direct knowledge of the proposal.

Governor Alejandro Garcia Padilla is set to receive from his top officials and outside restructuring advisers on Tuesday what is being called by his administration as an economic recovery and debt-adjustment plan, or the Working Group plan.

That report will include annual revenue and expenditure projections for the next five years after taking into account proposed spending reductions and measures to boost revenue collection rates, according to the person, who asked for anonymity because the discussions are private. Those calculations won?t include annual principal and interest costs, so the gap between estimated revenue and anticipated spending, what the report will call a ?primary surplus,? will indicate how much Puerto Rico can afford to pay for debt service every year, the person said. The person declined to say what the primary surplus would be.

?This is really just the beginning of a new stage, but this stage still could last years,? said Matt Fabian, a partner at Concord, Massachusetts-based Municipal Market Analytics. ?You have different sets of buyers, all with different expectations for their recovery and all with different willingness to negotiate on price.?

Barbara Morgan, who represents the Government Development Bank at SKDKnickerbocker in New York, said Monday that the bank didn?t have a comment at this time. Betsy Nazario, a spokeswoman in San Juan for the GDB, and Jesus Manuel Ortiz, a spokesman in San Juan for the governor, didn?t immediately respond to e-mails.

The commonwealth and its agencies pay about $4 billion each year in debt service, not including principal and interest costs for the Electric Power Authority and the Aqueduct and Sewer Authority, the person said. A Puerto Rico agency, the Public Finance Corp., missed a Sept. 1 interest payment, according to a filing with the Municipal Securities Rulemaking Board. It?s the second skipped payment for the agency after failing to pay $58 million of principal and interest Aug. 3 because lawmakers didn?t allocate the funds in a budget crunch.

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