A tentative settlement related to the use of Puerto Rico's sales tax revenue to pay the country's debt is "mutually beneficial" to the island and its creditors, according to MBIA Inc. CEO William Fallon.

Puerto Rico's bondholders reached a tentative agreement on applying sales taxes to the restructuring of $18 billion of debt, The Wall Street Journal reported. The agreement would divide the tax money among senior and junior holders of COFINA, or revenue bonds, which are the island government's largest debt obligation.

MBIA will continue to pursue all its rights and remedies as insurer of the government's municipal bonds, Fallon said during a conference call to discuss quarterly earnings.

MBIA's share price and ratings have suffered as a guarantor of debt issued by the Puerto Rico Electric Power Authority, which had been in a financial crisis years before Hurricane Maria pummeled the island commonwealth in 2017.

The settlement would see the exchange of 93% of the long-term debt bonds that MBIA insures, plus a fee, for bonds with higher interest rates and cash plus interest, Fallon said during the call. The parties still need to hash out details of the agreement, but the outline provided so far would mean MBIA would require no further reserves to account for any losses on Puerto Rico-insured bonds, he added.