The Government Development Bank for Puerto Rico hasnegotiated a framework of indicative terms for a restructuring of its bondswith a group of bondholders holding approximately $900 million of outstandingnotes.

The key terms contemplate a two-step restructuring in whichall holders of old notes would first exchange their current holdings for newinterim notes, to be followed by an exchange of those interim notes as part ofa future global restructuring of Puerto Rico's debt. As part of the agreed keyeconomic terms, creditors accepted a haircut of 43.75% of the face amount oftheir old notes in the first-step exchange. Also as part of the transaction,bondholders would agree to the proposed treatment for their notes, in a secondstep exchange as part of a global restructuring that would result in an agreedhaircut of 53% of the face amount of their old notes.

The proposed terms of the interim exchange require 100%participation by all bondholders, including, in addition to the bondholdergroup, the state-chartered credit unions in Puerto Rico and other largeinstitutional groups.