Democratic lawmakers attack PREPA’s non-consenting bondholders

Democratic members of the U.S. House of Representatives attacked Puerto Rico Electric Power Authority’s non-consenting bondholders Wednesday.

Those holders have been offered a 3.5% recovery in PREPA’s eight-year-old bankruptcy proceeding, which shows no sign of reaching a conclusion.

At a meeting of the Subcommittee on Indian and Insular Affairs in the U.S. House Committee on Natural Resources, Rep. Nydia Velázquez, D-New York, and Rep. Alexandria Ocasio-Cortez, D-New York, called the investment firms in the non-consenting group “vulture funds.”

Golden Tree Asset Management, one of the group’s firms, is working against Puerto Rico’s people, Velázquez said.

Golden Tree made its first investment in PREPA bonds about a year after the bankruptcy started, Ocasio-Cortez said. It tripled that investment 4.5 years after the bankruptcy, she said and that is the “definition of a vulture fund.”

U.S. Rep. Teresa Leger Fernández, D-New Mexico, said Puerto Ricans are paying 60% higher electrical rates than the national average. The non-consenting bondholders want to prioritize themselves over other goals, she said.

The non-consenting bondholders want “blood out of a turnip,” Leger Fernández said.

The non-consenting bondholders have made a rate request to Puerto Rico’s rate regulator, Puerto Rico Energy Bureau, to raise rates enough to pay all $12 billion in principal and unpaid interest, said Robert Mujica, Jr., executive director of the Puerto Rico Oversight Board. He said this indicated the non-consenting bondholders are seeking full repayment.

In court filings and oral court hearing statements, the non-consenting bondholders have generally indicated they would be willing to settle for something less than 100% payment, but more than the 3.5% on offer.

To pay back $12 billion, PREPA would have to raise rates by 8 cents per kilowatt hour for 50 years, Mujica said. There would have to be additional rate increases to cover unfunded pensions and capital needs.

Puerto Rico Resident Commissioner Pablo José Hernández complained the board has cost more than five times what Congress was told it would cost.

José Hernández complained that after nine years in power the board has overseen zero balanced budgets for the territory. He asked Mujica whose fault that was.

Mujica said it was the Puerto Rico government’s fault.

José Hernández responded it was the fault of the board as well as the local government.

The commonwealth’s government and the board adopted a balanced budget at the end of June for fiscal 2026. However, it won’t be considered balanced under the Puerto Rico Oversight, Management and Economic Stability Act until the fiscal year ends and an independent auditor finds it balanced under modified accrual standards.

PROMESA requires four years of balanced budgets and the ability of Puerto Rico’s local government to access the capital markets for Congress to consider ending the Oversight Board, which was set up in 2016.

Rep. Jeff Hurd, R-Colo., said the collaboration of the Oversight Board and territorial government on the fiscal 2026 budget was a good step.