Many of the largest cooperativas in Puerto Rico have agreed to alimited exchange of about $33 million in Government DevelopmentBank bonds in a deal that was announced just days before theisland's government defaulted on $422 million in other bonds.

The deal did not mention any federal support for the statecooperativas and the $33 million is a just drop in the bucket asthe cooperativas hold hundreds of millions of dollars in GDB bonds.The GDB said negotiations are continuing with other entities thathold its bonds, including hedge funds. Meanwhile, the island'sgovernment defaulted on $422 million in bonds Tuesday.

Cooperativas are financial institutions insured by a territorygovernment agency, the Corporation for the Supervision andInsurance of Cooperatives. There are more than 100 cooperativas inPuerto Rico in addition to 11 credit unions that are insured by theNCUA.

The cooperativas currently have more than 966,000 members andtotal assets of $8.47 billion.

Attorney Jose Sosa-Llorens, who represents several of the majorcooperativas, has said Congress should consider granting the NCUA the authorityto guarantee the cooperativas' deposit insurance. However, legislation to assist Puerto Rico with its debt crisis remainsstalled on Capitol Hill.

Under the deal with the GDB, the cooperativas will exchangeabout $33 million in bonds that had been scheduled to mature on May1, 2016 for newly issued bonds that will mature on May 1, 2017.

“This private exchange was designed to address the uniquefinancial considerations of the cooperativa institutions,” theGDB said in a statement. “As GDB and the Commonwealth of PuertoRico have repeatedly stated the government recognizes the key rolethe cooperativas play in promoting social and economic developmenton the island and is committed to working with thecooperativas.”

Recently, an association representing cooperativas purchased afull-page ad in one of the island's major newspapers expressingsolidarity with the government and its desire to cooperate indeveloping a solution to the crisis, and to remind people of thedifference between the cooperativas and hedge funds, according toLuis Gallardo, an attorney and a city council member in AguasBuenas, Puerto Rico, who has written extensively on the PuertoRican debacle.

“I think this was necessary in order to remind that not all bondholders are alike,” he said.

Gallardo added legislation is pending in the island'slegislature to exempt cooperativas from the recently enacted debtmoratorium.

“We have to see how it comes out of the local legislature andsee whether the governor signs it into law,” he said. “This wouldbe the ideal situation for the cooperativas and would save themfrom monthly uncertainties.”

However, a second attorney was more skeptical of the dealbetween the GDB and the cooperativas. Only 25 of the cooperativaswere part of the deal, said John Mudd, an attorney in Puerto Ricowho represents one cooperativa and has written extensively aboutthe Puerto Rico debt crisis, said.

“Where are the others?” he asked. “We don't know.”