The Puerto Rico Electric Power Authority made its coupon payment late yesterday amid plenty of speculation it would skip it, but BTIG's Mark Palmer says it doesn't mean a restructuring will be avoided.
Also out yesterday, was Puerto Rico's Basic Financial Statements and Required Supplementary Information for the fiscal year ended June 30, and the report acknowledges "heightened liquidity and market access risk as a result of the maturity in July and August 2014 of two short-term credit lines of credit in an aggregate principal amount of $671 million."
So why did PREPA make a payment rather than preserve cash? Just getting its "ducks in a row," says Palmer, ahead of what he believes will be a Chapter 2 filing under the just-passed bankruptcy law. "We recommend that investors not make their decisions about their investments in the bond insurers based on what we would characterize as a head fake."