The Public Corporation for the Supervision of Puerto Rico Cooperatives, or COSSEC as the entity is known in Spanish, confirmed it is drafting a “fiscal stability plan” where the sector will present strategies to stabilize the island’s co-op system and its more than 1 million members.
Over the weekend, COSSEC Executive President Sergio Ortiz-Quiñones said the plan will cover insurance funds and other transactions that should be considered to ensure the stability and growth of co-ops.
The plan will fulfill a petition from the Financial Oversight and Management Board for Puerto Rico, which earlier this month placed COSSEC and five other government entities on a watchlist, preventing them from making material decisions and ordering each to submit a fiscal plan.
Ortiz-Quiñones said the public corporation he heads is in talks with the Board, “working closely and constructively” providing the information and documents requested so far.
COSSEC fell in the Board’s crosshairs after it was revealed that it was pursuing an exchange of government bonds owned by Puerto Rico cooperatives for preferred stock to be issued by COSSEC. The transaction was seen as purely of accounting nature to save co-ops, which have more than $1 billion invested in Commonwealth debt, mainly Government Development Bond debt. The group generated an unrealized debt of more than $500 million for that transaction.
During a recent meeting, COSSEC’s board of director approved the creation of a Trust Fund for the Protection of Funds, Shares and Deposits of the public corporation, to prevent the use of funds for purposes not consonant with Law 114. The agency is drafting the parameters involved in the segregation of the funds and other key aspects, Ortiz-Quiñones said.
The executive also said COSSEC will soon develop procedures to oversee each co-op, including its fiscal condition, a liquidity analysis, investments, capital structure, arrears, and a stress test, among other.
COSSEC reported $264.3 million in assets at the end of June 30, up $18.9 million from the prior 2015 fiscal year.