1

Index

section

section

section

section

Disclaimers

Puerto Rico
Capital
Markets

Our Goals
and Vision

Puerto Rico
Debt Issuers

section

section

section

Debt Issuer
Facts

Conclusions

Credits

Section 1: Disclaimers

Disclaimer

Bonistas del Patio, Inc. and each of their respective officers, directors, employees, agents, attorneys, advisors,
members, partners or affiliates (collectively, Bonistas) make no representation or warranty, express or implied,
to any third party with respect to the information contained herein and all such persons expressly disclaim any
such representations or warranties.

Bonistas does not owe or accept any duty or responsibility to any reader or recipient of this presentation, whether
in contract or tort, and shall not be liable for or in respect of any loss, damage (including, without limitation,
consequential damages or lost profits) or expense of whatsoever nature of such third party that may be caused
by, or alleged to be caused by, the use of this presentation or that is otherwise consequent upon the gaining of
access to this document by such third party.

This document does not constitute an audit conducted in accordance with Generally Accepted Auditing
Standards, an examination of internal controls or other attestation or review services in accordance with
standards established by the American Institute of Certified Public Accountants or any other organization.
Accordingly, Bonistas do not express an opinion or any other form of assurance on any financial or other
information contained herein.

Information in this presentation does not involve the rendering of personalized investment advice. A professional
advisor should be consulted before implementing any of the options presented. No content should be construed
as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.
4

Disclaimer

Information presented in this document has been compiled from publicly available data that is believed to be
factual and up to date, but we do not guarantee its accuracy and it should not be regarded as a complete
analysis of the subjects discussed. All expressions of opinion reflect the judgment of authors as of the date
thereof and are subject to change. Any statements and assumptions contained in this document, whether
forward-looking or historical, are not guarantees of future performance and involve certain risks, uncertainties,
estimates and other assumptions made in this document.

Nothing in this document should be considered as an express or implied commitment to do or take, or to refrain
from taking, any action by Bonistas or an admission of any fact or future event. Nothing in this document shall be
considered a solicitation, recommendation or advice to any person to participate, pursue or support a particular
course of action or transaction, to purchase or sell any security, or to make any investment decision.

By accepting this document, the recipient shall be deemed to have acknowledged and agreed to the terms of
these limitations.

This document may contain capitalized terms that are not defined herein, or may contain terms that are
discussed in other documents. You should make no assumptions about the meaning of capitalized terms that are
not defined, and you should consult with advisors on the meanings of the terms should clarification be required.

Section 2: Puerto Rico

Capital Markets

Puerto Rico Capital Market Evolution

Since 1996 Local Puerto Rico Investors have invested over
$42 Billion
44

Initial Phase

Government & AFICA Bonds

Developed Phase

Government Bonds, Corporate Debt,

Preferred Stock, Funds, and Common Stock

40

Funds
Common
Stock

36

In billions $

32
28
24

$9.28 billion

$5.22 billion
UP TO $15 BILLION IN LOCAL
GOVERNMENT BONDS ARE CURRENTLY
HELD BY
PUERTO RICAN INVESTORS

Corporate
Debt
& Preferred
Stock

$25.1 billion

20

Government
Bonds

16
12
8

1
2

$2.98 billion

AFICA Bonds

8990 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
13 14 15

Section 3:
Our Goals and Vision

Goals and Vision

Approximately

22%
of all Government debt
is held by local Puerto

These local Puerto Rican investors range from large

institutional investors to retirees whose hard-earned
salaries were invested as part of their individual
retirement plans.
Puerto Ricos fiscal crisis is one of liquidity.

We seek to protect the rights of local investors by

seeking 100% repayment of the Constitutionally
guaranteed and secured debt.
We seek to protect to its maximum the principal of
all other non-constitutionally guaranteed or
unsecured debt by seeking alternative repayment
schedules.
Bonistas del Patio, Inc. intends to be at the
negotiating table representing our members
collectively.

Section 4: Puerto Rico

Debt Issuers

10

Puerto Rico Debt Issuers

Principal Amount as of May 2016

Approximately 22% of
the total debt of Puerto
Rico is in local hands.
Local bondholders holda
stake that is
comparable to that held
by the Venture Funds.
We have earned our
place at the negotiating
table!

11

12

Section 5:
Issuers Facts

Current 5-year Debt Service by Issuer

As presented in the Commonwealth of Puerto Rico Working Group proposal.

13

Working Group Projections

Sources: Puerto Rico Fiscal and Economic Growth Plan

14

General Obligations of the Commonwealth (GO)

The GO are secured by the full

faith, credit and taxing power
of the Commonwealth of
Puerto Rico and a priority of
payment under the
Constitution of the
Commonwealth.

Both Act No. 21-2016

(moratorium act) and House
Bill 5278 (PROMESA) provide
that the GO debt service may
be restructured regardless of
its first priority of payment
over other government
expenditures provided under
the Commonwealth
Constitution.

The GO Ad Hoc group

proposed a 5 year principal
deferral and 11% principal
haircut

15

GO 5-year Debt Service

Current Scenario

Proposed Scenario

Sources: Bloomberg & GBD

16

COFINA

Payable from the

sales tax pursuant
to Act 91-2006, as
amended.

COFINA receives all of

the revenues generated
from the Dedicated Sales
Tax Fund. 2.75% of the
sales tax is pledged to
COFINA for the payment
of its Bonds. Each fiscal
year the first receipts of
the Commonwealth's
Sales Tax, in the amount
specified by law, are
deposited in the
Dedicated Sales Tax
Fund and applied to the
payment of the COFINA
Sales Tax Revenue
Bonds.

The revenues from the

sales tax flow directly into

Sales tax revenues

are performing
strongly and within
budgeted amounts.

a lock-box in Banco
Popular de Puerto Rico
and are not considered
available resources of
the Commonwealth for the
purposes of the priority of
payments established
under the PR Constitution.

17

COFINA 5-year Debt Service

CURRENT SCENARIO

Seniors
2016
2017
2018
2019
2020
Subordinates
2016
2017
2018
2019
2020
Totals
2016
2017
2018
2019
2020

Principal Due

Interest Due

Projected Revenue

Excess (Shortage)

10,603,329
226,704,649
226,704,649
226,704,649
226,704,649

4,763,725
447,585,234
466,885,571
465,337,996
470,525,393

15,367,054
674,289,883
693,590,220
692,042,645
697,230,042
2,772,519,844

38,295,000
18,745,000
47,950,000
79,765,000

38,295,000
18,745,000
47,950,000
79,765,000
184,755,000

Seniors

2016
2017
2018
2019
2020
Subordinates
2016
2017
2018
2019
2020
Totals
2016
2017
2018
2019
2020

Principal Due

Interest Due

696,000,000

724,000,000
753,000,000
783,000,000
815,000,000
3,771,000,000

PROPOSED SCENARIO

10,603,329
226,704,649
226,704,649
226,704,649
226,704,649

4,763,725
447,585,234
466,885,571
465,337,996
470,525,393

15,367,054
674,289,883
693,590,220
692,042,645
697,230,042
2,772,519,844

Puerto Rico Sales Tax Financing Authorithy

15,615,032
44,864,695
47,207,270
42,204,873
149,891,870

Interest on Principal
Deferral

Excess (Shortage) After

Interest Payment

1,914,750
937,250
2,397,500
3,988,250

1,914,750
937,250
2,397,500
3,988,250
9,237,750

50,080,532
61,735,195
90,362,270
113,993,373
316,171,370

Source: Bloomberg

18

PRHTA

The 1968 Indenture

Bonds are secured by a
pledge of the gross
receipts of the 16 per
gallon tax on gasoline
and 4 of the 8 per
gallon tax on gas oil and
diesel imposed by the
Commonwealth; the
gross receipts of the $15
per vehicle increase of
annual motor vehicle
license fees; and any
tolls or other charges
imposed by the Authority
for the use of any of the
traffic facilities.

59% of all PRHTA

The 1998 Indenture Bonds
are secured by a pledge of
all excise taxes on crude oil,
unfinished oil and derivative
products, up to $20 million
per fiscal year, imposed by
the Commonwealth and tolls
and other charges imposed
by the Authority for the use
of its Toll Facilities (other
than Existing Toll Facilities
Revenues prior to the repeal
of the 1968 Resolution.

PRHTA bonds of various

Debt is insured.

classes are issued under

the 1968 Indenture and the
1998 Indenture.
Excess moneys from
the1968 Indenture Bonds
flows down to pay the 1998
Indenture Bonds.

19

PRHTA 5-year Debt Service

Puerto Rico Highway & Transport Authority

Source: Bloomberg

20

Public Buildings Authority

The Bonds are secured by a pledge of rentals

of the facilities leased by Government
instrumentalities. The full faith and credit of
the Commonwealth are pledged for the
payment of rentals under such lease
agreements and to the making of advances
by the Secretary of the Treasury of the
Commonwealth to PBA of any unpaid portion
of rentals payable to PBA by any
instrumentality of the Commonwealth.

The Bonds are further secured by the guaranty

of the Commonwealth, under which the
Commonwealth pledges to draw from any funds
available in the Treasury of Puerto Rico such
sums as may be necessary to cover any
deficiency in the amount required for the
payment of principal of and interest on the
Bonds. The full faith and credit of the
Commonwealth are pledged for the payment of
debt service on the Bonds.

21

Public Buildings Authority

5-year Debt Service
PUERTO RICO PUBLIC BULDING AUTHORITY

Current Scenario
Principal
Due
-

Years
2016

Projected
Revenue

Interest Due
-

Excess
(Shortage)

2017 86,125,000

224,508,617

358,000,000

86,190,328

2018 90,905,000

219,662,673

358,000,000

86,256,272

2019 66,235,000

215,379,098

358,000,000

115,209,847

2020 69,645,000

211,658,159

358,000,000

115,520,786

Proposed Scenario
312,910,00
0
871,208,547

Years

Principal

1,432,000,00
0
403,177,233

Interest

2016

Excess
(Shortage)
After Interest
Payment

Interest on
Principal
Deferral
-

2017

224,508,617

4,306,250 168,009,078

2018

219,662,673

4,545,250 172,616,022

Source: Bloomberg

Under the new government budget there is not

2019
215,379,098
3,311,750 178,133,097
rent assignment for Public Buildings, thus further
2020
211,658,159
3,482,250 181,683,536
impacting
the payment
ability

22

GDB is one of the most common holdings

among PR resident bondholders.

The Bonds issued by GDB are general,

unsecured, senior obligations of the Bank,
ranking on a parity with all other general,
unsecured and unsubordinated obligations of
the Bank for borrowed money and with
unsecured and unsubordinated GDB
guarantees of obligations of others for
borrower money nor or hereafter outstanding.

23

GDB 5-year Debt Service

The Governor of Puerto Rico declared GDB in a state
of emergency as required by Act No. 21-2016.

Government Development Bank (GDB)

Source: Bloomberg

24

Pension Obligation Bonds (POBs) are payable exclusively from

employer contributions to the Pension Plan
Employer contributions were increased from 9.275% of payroll to
20.52% over a 10 year period as required by Act No. 447-1951,
significantly increasing debt service coverage.

25

Proposal Summary:
No maturities are scheduled for 5 years an action plan
must be implemented to reduce the unfunded liability
estimated to be north of $45 Billion for all Government
ERS.

Employee Retirement System

5-year Debt Service
Employee Retirement System

Years

Principal Due

Projected
Revenue

Interest Due

Excess (Shortage)

2016

13,876,583

(97,136,078)

2017

166,518,990

486,952,432

320,433,442

2018

166,518,990

486,952,432

320,433,442

2019

166,518,990

486,952,432

320,433,442

2020

166,518,990

486,952,432

320,433,442

26

Puerto Rico Infrastructure Financing Authority

The Series 2005 Bonds are

secured by a pledge of (i) the
first $70 million from fiscal years
1998 to 2006 and the first $90
million from fiscal years 2007 to
2052 of Federal Excise Taxes
imposed on rum and other
articles produced in Puerto Rico
and sold in the United States
that are transferred to the
Commonwealth; (ii) any other
funds appropriated to PRIFA to
make up a deficiency in the
amount of Federal Excise Taxes
required to be transferred
annually to PRIFA.

The Series 2006 Bonds are secured

by a pledge of (i) the first $70
million from fiscal years 1998 to
2006, the first $90 million from fiscal
years 2007 to 2009, and the first
$117 million thereafter through
fiscal year 2057 of Federal Excise
Taxes imposed on rum and other
articles produced in Puerto Rico and
sold in the United States that are
transferred to the Commonwealth;
(ii) any other funds appropriated to
PRIFA to make up a deficiency in the
amount of Federal Excise Taxes
required to be transferred annually
to PRIFA.

The Series 2011 Bonds are

limited obligations, payable
solely from the loan
repayments of the Ports
Authority pledged for such
payment, and are secured by a
pledge and assignment of
amounts held in the fund and
accounts established pursuant
to the related Loan and Trust
Agreements. In addition, the
Series 2011 Bonds are secured
by a Letter of Credit from GDB.

27

PRIFA 5 year Debt Service

Puerto Rico Infrastructure Financing Authority
Current Scenario
Principal
Due

Years

2018
2019
2020

Excess
(Shortage)

2016
2017

Projected
Income

Interest Due
5,110,756

5,110,756)

43,970,000

83,258,463

270,000,000 142,771,538

45,215,000

80,917,850

320,000,000 193,867,150

47,580,000

78,464,038

343,000,000 216,955,963

48,890,000

75,912,269

344,000,000 219,197,731

Proposed Scenario

185,655,00
1,277,000,0
0
323,663,375 00
767,681,625

Years
2016
2017

Principal

2020

Excess
(Shortage)
After Interest
Payment

Interest on
Principal
Deferral

Interest

5,110,756

83,258,463

2,198,500

184,543,038

80,917,850

2,260,750

236,821,400

78,464,038

2,379,000

262,156,963

75,912,269

2,444,500

265,643,231

323,663,375 9,282,750

2018

Source: Bloomberg
2019

949,164,631

28

Puerto Rico Public Finance Corporation (PFC)

The Bonds are limited obligations of PFC payable solely

from payment of principal of and interest on certain
notes issued in connection with the restructuring of
certain outstanding loans made by GDB to certain
departments, agencies, instrumentalities and public
corporations of the Commonwealth. The notes are
payable solely from budgetary appropriations to be
made pursuant to legislation approved by the
Legislature and signed by the Governor.

29

PFC 5-year Debt Service

Puerto Rico Public Finance Corporation (PFC)
Years

Principal Due

2016

2017
2018
2019
2020

Projected
Income

Interest Due

(1,422,845)

29,435,00056,431,239

(85,866,239)

30,450,00055,310,425

(85,760,425)

31,590,00054,067,112

(85,657,112)

32,855,00052,720,277

(85,575,277)

124,330,000

1,422,845

Excess
(Shortage)

219,951,899

- (344,281,899
)

Source: Bloomberg

30

Convention Center District (CCD)

The Bonds issued by the Convention Center are special

limited obligations of the CCD payable from all
Occupancy Tax Act revenues up to the amount necessary
for the full payment of the principal and interest on the
Bonds, together with the right of the CCD or GDB to
receive such funds as set forth in the Occupancy Tax
Act.

31

CCD 5-year Debt Service

CONVENTION CENTER DISTRICT

Source: Bloomberg

32

The Bonds are payable from the gross

revenues received by PRIDCO from certain
of its revenue-producing real properties,
machinery, equipment, first mortgages on
real property, or first mortgage bonds,
which are specified by PRIDCO to be
Trusteed Properties pursuant to the terms
of the Trust Indenture (the Trusteed
Properties).

Gross revenues of the Trusteed Properties

include (i) all cash income received by
PRIDCO on account of its ownership and
operation of the Trusteed Properties, (ii) the
proceeds of use and occupancy insurance, if
any, received with respect to such Trusteed
Properties, and (iii) any interest or other
income from mortgages or mortgage bonds
included as Trusteed Properties.
33

PRIDCO 5-year Debt Service

Puerto Rico Industrial Development Company
(PRIDCO)

Source: Bloomberg

34

35

Section 6:
Conclusions

CONCLUSIONS
A thorough analysis of each credits revenue sources tells us:

The Puerto Rico Fiscal Crisis is one of liquidity only to meet principal maturities.
Current and projected revenue allow for full interest payments without sacrificing any
essential services.
Only 3 issuers present cash flow problems: GDB, PFC, PRHTA. .

IT IS NOT CAPACITY THE GOVERNMENT LACKS, ONLY WILL.

We have honored our commitments, now is Puerto Ricos turn to honor theirs ..

36

CONCLUSIONS
The facts are clear:
Bondholders should not have to suffer the consequences of many years of fiscal
mismanagement.
It is Governments responsibility to provide transparency by presenting
Its audited financial statements and other essential information.
Local bondholders pay the taxes that allow the Government to fund essential services
and pay its debt.
In order to ask bondholders for a voluntary restructuring, the Government must be
willing to curb unnecessary government spending.
We have honored our commitments, we insist Puerto Ricos Government must honor
theirs.

37

PROPOSAL
To allow government time to undertake necessary reforms and a governmental
restructuring, Bonistas del Patio is willing to voluntarily accept the following proposal:
A five (5) year principal payment moratorium and deferral on all governmental issuers analyzed
in this presentation. This would significantly reduce the Commonwealths fixed principal payment
obligations by approximately $5.8 billion during such five (5) year period.

Interest payments on all obligations must continue to be paid. This allows for approximately
$2,055,120 million per year to continue flowing into our economy .

Bonistas del Patios members may be willing to consider haircuts on certain credits, if and
only:
Government provides updated audited financial statements and operating information for all
credit classes and an unequivocal inability to pay is determined.
Government is willing to restructure all expenses, not only debt service .
38

39

Section 7:
Credits

Firm Overview
Birling Capital is a boutique corporate advisory &
consulting firm that offers broad corporate finance &
advisory services to institutional, government, corporate,
middle-market companies, family corporations and their
owners, in identifying and resolving corporate finance
related issues as part of a holistic approach both assets
and liabilities sides with integrated business, personal,
family needs and objectives.
Francisco Rodriguez-Castro, President & CEO
Mr. Rodriguez-Castro is Managing Partner of Birling Capital since its creation and manages all aspects of its practice.
Mr. Rodriguez-Castro with over 25 years of experience has been a key executive in government, global, multinational
and public companies as well as a key corporate advisor to multiple entities in a diverse array of market segments.
He has participated in structuring over $10 billion in Municipal Finance, Corporate, Commercial, Asset Based, AFICA
and Mergers and Acquisitions transactions.
Mr. Rodrguez Castro has been Managing Director at UBS, President & CEO of the Economic Development Bank and
held senior lending positions in the corporate banking sector. He is also a key leader in promoting the private sectors
participation in the formulation of public policy of the country supporting the governments in its efforts to achieve
and maintain sustained economic development for Puerto Rico. In addition to his management roles he was the
founder of the Private Sector Coalition a not for profit association.
40

Firm Overview
Select Advisory Group (SAG), one of the top
independent Registered Investment Advisors in Puerto
Rico, according to AUM. An Independently owned firm
that offers comprehensive Wealth Management
solutions exclusively to entities and individuals of High
Net Worth and Ultra High Net Worth.
Luis De Jesus - Aponte is the Founder and Head of Select Advisory Group (SAG), one of the top
independent Registered Investment Advisors in Puerto Rico, according to AUM. An Independently
owned firm that offers comprehensive Wealth Management solutions exclusively to entities and
individuals of High Net Worth and Ultra High Net Worth.

Prior to founding SAG, he worked for global firms such as PricewaterhouseCoopers LLC, Ernst & Young
LLC and Arthur Andersen LLC, where he worked at the Tax Department on corporate matters and
provided services to international assignment executives, developing substantial experience in
Federal and Puerto Rico Tax Compliance.

Luis is a Certified Public Accountant, graduated from the University of Puerto Rico Business School.

41