Puerto Rico Can't Pay Its Bills

[longknife]

So the governor suspends paying debts issued by the territory's infrastructure financing authority. Seems he asked for a US bail out but the House passed legislation aimed at creating a federal oversight board to oversee a restructuring of the island’s debt, while putting in place a suspension on any past and future lawsuits related to the non-payment of some of its debts. Still waiting for the Senate to act on it.

Puerto Rico, with 3.5 million U.S. citizens, a 45 percent poverty rate and rising emigration to the mainland that cuts into economic growth, has $70 billion worth of debt is says it cannot repay in full. (my bold)

Read story @ Puerto Rico Governor suspends payments on infrastructure debt - One America News Network

And, of course, Congress is playing games with this. The House passes PROMESA (H.R. 4900) @ Text - H.R.4900 - 114th Congress (2015-2016): PROMESA with one word from the original deleted. The word? INSOLVENCY. So, what's the big deal?

There is where the word “insolvent” appeared, and this is key, because if an entity was actually insolvent, the Oversight Board could restructure its debt. But if that entity was not insolvent, and therefore could pay its bills, it would be required to do so. Removing the word “insolvent” clearly allows the Oversight Board to relieve, and forgive, the debts of any, if not all of Puerto Rico’s instrumentalities, resulting in the very kind of bailout and bankruptcy PROMESA was intended to prevent.

Read the full story w/links @ Removing One Word from PROMESA Makes it a Bailout for Puerto Rico

 

[waltky]

Puerto Rico gonna get itself outta hock...

Puerto Rico announces huge, historic debt restructuring
May 3,`17 -- Puerto Rico's governor on Wednesday announced a historic restructuring of a portion of the U.S. territory's $70 billion debt through courts after negotiations with bondholders failed. The announcement marks the biggest bankruptcy-type process ever for the U.S. municipal bond market.

Gov. Ricardo Rossello said that a federal control board overseeing the island's finances agreed with his request late Tuesday to put certain debts before a court. "We're going to protect our people," he said hours after the U.S. territory was hit with multiple lawsuits from creditors seeking to recuperate the millions of dollars they invested in bonds issued by Puerto Rico's government, which has declared several defaults amid a 10-year recession. Rossello said one of the lawsuits sought to claim all revenues generated by the island's Treasury Department for bondholders. "I'm not going to allow that to happen," he said.

A federal district court judge will now be in charge of determining how Puerto Rico's debt will be restructured. Bondholders cannot challenge Rossello's decision until 120 days from now. Meanwhile, the process to restructure the debt in court will continue, said Elias Sanchez, the governor's representative to the board.

He noted that unlike a regular bankruptcy on the U.S. mainland, a judge cannot unilaterally seize any of Puerto Rico's assets without prior authorization from the federal control board. It is too early to say what kind of impact a debt restructuring in court will have on the island of 3.4 million people, economist Jose Joaquin Villamil told The Associated Press.

"(It) presents a very big risk for both parties," he said, referring to the government and to bondholders. "We don't know what a federal district court judge is going to decide." However, he warned that the process will further spook the type of investors that Puerto Rico's economy needs as it prepares to implement several austerity measures.

News from The Associated Press