General Obligation Bondholders

of the Commonwealth of Puerto Rico

TERMS OF
CREDITOR-LED GO RESTRUCTURING PROPOSAL
April 11, 2016

Subject to FRE 408 and all

local law equivalents

Executive Summary

GO Bondholders and Insurers Assist the Commonwealth - The attached Term Sheet represents an agreement amongst
investment managers and insurers holding or controlling nearly $6.5 Bn of GO bonds, issued or guaranteed by the
Commonwealth of Puerto Rico, to defer principal repayment in order to give the Commonwealth sufficient time to deal with
its current financial situation. In addition, as insured bonds come due, the insurers would agree to purchase an amount of
GO bonds with a five year maturity equal to the principal amount of the maturing bonds subject to conditions outlined herein.

Principal Deferment - Through a consensual exchange offer of new bonds (the GO Exchanged Bonds) for outstanding
uninsured GO bonds, GO bondholders agree that all principal payments for all GO bonds, regardless of maturity, will be
deferred by an average of 5 years. In addition, as insured bonds come due and subject to the conditions herein, the
insurers would agree to purchase an equal amount of GO bonds (the Insurer Refunding Bonds, and together with the GO
Exchanged Bonds, the New GO Bonds) with a five year maturity, effectively extending the maturity of such insured bonds.

Substantial Savings - This exchange would save the Commonwealth $1.9 Bn in debt service payments over the next 5
years.

New Loan - The transaction also offers [$750 MM] of liquidity upfront through a GO issuance at a reasonable interest rate.

Avoid GO Default - The combination of principal deferment plus [$750 MM] in new funds will help to avoid a July 1 default.

GO Preserved as Future Currency - The Commonwealth will need the GO debt as currency to finance itself in the future.
By avoiding a July 1 default, the Commonwealth will avoid damage to the GO debt that would otherwise impact the
Commonwealth's ability to issue GO debt in the future.

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Subject to FRE 408 and all

local law equivalents

New GO and New Guaranteed Bonds

Creditors Receiving New GO Bonds

and New Guaranteed Bonds

Principal

Interest
Amortization Schedule
Participation Threshold

Holders of uninsured GO and Guaranteed Bonds upon consummation will exchange

for GO Exchanged Bonds

Insurers on each principal payment date will purchase the Insurer Refunding Bonds,
subject to the conditions below

Up to $17.0 Bn (100% of exchanged principal and accrued interest) (excludes

PRIFA BANs)

Maturities to be adjusted to smooth debt service and extend the weighted average
life on all GO bonds by 5 years

Contractual rates maintained

Monthly deposits of interest

In the aggregate, after giving effect to the Insurer Refinancing:

Interest only through June 2020

Level debt service beginning July 1, 2020 for 25 years

[]% of GO and Guaranteed Bonds

Each insurer agrees at consummation that as insured bonds mature (and subject to
conditions below), the respective insurer will purchase an amount of New GO Bonds
equal to the principal amount of the maturing bonds with a 5 year maturity
Maturing insured GO bonds must be paid upon maturity

Insurer Refinancing

Conditions Precedent

Reaffirmation by the Commonwealth of constitutional priorities

Receipt of satisfactory evidence that GO Exchanged Bonds and Guaranteed Bonds,
Insurer Refunding Bonds, and New Money GO Bonds (after giving effect to the
issuance of such bonds) are issued in compliance with the debt limit for public debt
in the Commonwealth Constitution and authorizing statute
Satisfactory completion of financial due diligence by participating holders and
insurers

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Subject to FRE 408 and all

local law equivalents

New Money GO Bonds

Principal

[$750] MM subject to revision based on agreed-upon funding needs

Interest

[7%] per annum

Amortization Schedule

Interest only through June 2020

Principal scheduled thereafter to maximum amount available under GO debt limit

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Subject to FRE 408 and all

local law equivalents

TermsNew GO, New Guaranteed and New Money GO Bonds

Positive Covenants

Resumption of deposits into GO escrow account (to be held in a NY bank)

Monthly reporting

Negative Covenants

No new issuance of Guaranteed Bonds

No new issuance of additional GO Bonds unless compliant with Constitutional test
No additional sale, pledge or assignment of any tax; special revenue limitations
TBD

Statutory Lien

Further affirmation of first priority by enactment of statutory lien on General Fund

revenues (akin to Rhode Island and California) to secure all outstanding GO and
Guaranteed Bonds and New GO, New Guaranteed and New Money GO Bonds

Other Structural Provisions

New York law and venue

Waiver of sovereign immunity
Maintain tax-exempt status
GO Guaranteed Bonds will continue to receive primary source of repayment (i.e.,
guarantee will not be triggered)
Cross-defaults among GO and Guaranteed Bonds

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