Agreement among Puerto Rico Electric Power Authority bondholders is dangerous for the island, experts says

Investment firms GoldenTree and BlackRock announced an alliance controlling 90% of the electric company’s bonds, putting Puerto Rico’s electrical grid and economic future at risk.

The Citizens’ Commission for a Comprehensive Audit of the Public Debt in Puerto Rico warned about the dangers of the agreement reached by PREPA’s main bondholders. The deal consolidates nearly all of the creditors whose debt drove the public energy authority into bankruptcy into a single bloc, aiming to secure a larger payout than what is proposed under the Financial Oversight and Management Board’s current Plan of Adjustment.

Juan José Jimenez, legal advisor to the Citizen Commission, explained that the agreement brings together GoldenTree Asset Management—widely regarded as the most aggressive bondholder in the bankruptcy—with insurers like Syncora and Assured. It also merges the original PREPA Ad Hoc Bondholders’ group with the powerful institutional bloc advised by Paul Weiss, which includes BlackRock, Nuveen, Franklin Advisors, Bay Capital Management, Taconic Capital Advisors, and Whitebox Advisors LLC. Together, these firms control nearly 90% of PREPA’s bonds. Under the new agreement, they will act as a single front: sharing legal information, enforcing confidentiality, coordinating lawsuits, and executing joint strategies.

BlackRock had previously signaled support for the Fifth Plan of Adjustment, under which the Board acknowledged the fragility of Puerto Rico’s electric grid and recommended reducing debt repayment. GoldenTree, by contrast, blocked the Plan for more than two years, demanding full repayment to bondholders. Now, in a striking reversal, BlackRock has joined GoldenTree’s all-or-nothing stance—just as the White House has moved to dismiss most members of the Oversight Board.

José Alameda Lozada, economist and president of the Citizen Commission, warned that the new bondholder alliance poses serious risks, stressing that it could bring devastating consequences for Puerto Rico.

“If bondholders’ demands prevail, Puerto Rico’s energy and economic future will be held hostage for decades. Electricity bills would rise to unsustainable levels for 30 or 40 years, while funds needed to modernize the grid and transition to renewable energy would instead be siphoned off to creditors—locking us into an unstable and costly system. There is simply no way to pay bondholders without undermining the island’s recovery after the hurricanes. The priority must be to ensure a just, accessible, and sustainable energy system for all,” he concluded.