NEW YORK, Sept 30 (Reuters) - Debt restructuring talks over Puerto Rico's financing arm, the Government Development Bank, have begun between a group of bondholders and the bank, a source familiar with the situation said, after the creditors signed non-disclosure agreements earlier on Wednesday.
GDB chief Melba Acosta said last week the bank would be the next entity from the commonwealth to engage in restructuring negotiations, following utility PREPA, which came to a deal with bondholders in September after about a year of talks.
Puerto Rico officials earlier in September proposed restructuring $18 billion of debt due in the coming five years as part of a broad plan to pull the island out of financial crisis.
The bondholders started negotiations on Wednesday, after the non-disclosure agreements were signed earlier in the day, said the source, who requested anonymity because the talks are not public. It will probably take several days to see whether negotiations can progress, the source said.
Some investors, or potential investors, which were not necessarily in that group, had already signed non-disclosures last week, a separate source familiar with the situation previously said.
Signing non-disclosure agreements restricts bondholders from disclosing non-public information and from trading and opens the way to formal negotiations.
Bloomberg earlier Wednesday reported the talks had started.
The GDB bondholder group consists of investment funds Brigade, Fir Tree, Solus, Fore Research & Management, Avenue Capital, Candlewood, and Claren Road, sources previously said.
The individual funds either did not respond for comment or declined to comment on Wednesday. A spokeswoman for the GDB declined to comment.
Debt restructuring could take the form of a debt exchange with new capital added. That could include exchanging notes for notes in The Puerto Rico Infrastructure Financing Authority (PRIFA) which could be backed by oil revenues, a source familiar with the situation said last week.
(Reporting by Megan Davies)