February 22, 2017 / 2:09 PM / 6 months ago

Puerto Rico sales tax creditors circle wagons in fight with GO bondholders

Feb 22 (Reuters) - Puerto Rico bondholders whose debt is backed by the U.S. territory's sales tax revenue, known as COFINA creditors, are asking a federal court to prevent the island from diverting those tax revenue streams to pay other creditors.

A group of funds holding more than $2 billion in COFINA debt on Wednesday sought to intervene in a lawsuit filed by some of Puerto Rico's general obligation bondholders. The plaintiffs in the lawsuit say the COFINA funds should instead go to them, under payment priority rules.

In a statement, the COFINA group called the GO bondholders' claims "meritless" and "self-serving," saying the "baseless action threatens the island’s ability to re-access the capital markets." (Reporting by Nick Brown; Editing by Lisa Von Ahn)

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