Puerto Rico would substantially reduce its core government debt load under a new deal announced on Tuesday, but obstacles remain for the U.S. territory’s exit from bankruptcy, Reuters reported. The island’s federally created financial oversight board said that its agreement with certain bondholders was a major step toward resolving the bankruptcy, which began in 2017 in an effort to restructure about $120 billion of debt and other liabilities, including unfunded pensions. “I’m hopeful that people over time will understand this is likely to be the most fair and confirmable resolution to exit bankruptcy,” Natalie Jaresko, the board’s executive director, told reporters. The deal will be included in a plan of adjustment the board expects to file in March in federal court, with the hope of court approval in the fall. Under the agreement, owners of $18.8 billion of general obligation (GO) and Public Building Authority (PBA) debt would receive a $7 billion cash payment and $7.4 billion in new bonds, as well as a capped share of the amount of sales tax revenue that exceeds 2020 fiscal plan projections. Read more.