What’s Next For Puerto Rico’s Debt Crises?
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Where Puerto Rico’s debt is today
The Hill reported (full article by Peter Shroeder Senate Dems Unite for in Call for Puerto Rico Debt Aid)
Senate Democrats have united to push for Puerto Rico to get bankruptcy protections to help it get out from under its massive debt burden.
Every Senate Democrat signed on to a letter released Wednesday, pushing Majority Leader Mitch McConnell (R-Ky.) to act quickly on legislation allowing the island territory to declare bankruptcy. They added that any Puerto Rico relief bill that does not include bankruptcy language would not be a “real solution.”
New York Times update
On January 28th Mary Williams Walsh of The New York Times reported on Prepa which is one of the largest single issuers of Puerto Rico’s $72 billion debt, primarily in municipal bonds (the full piece is entitled Puerto Rico Debt Negociations Resume)
“Prepa is one of the largest single issuers of Puerto Rico’s $72 billion debt, most of it in the form of municipal bonds, which are widely held through mutual funds and investment firms. It is a monopoly, owned by the residents of the island, and until 2014, it was self-regulated. When the deal fell apart late Friday night, some experts feared that the utility would be declared in default for failing to make required payments on the debt.
A sticking point in the negotiations between Prepa and the bondholders had been the terms of a new $115 million loan from the bondholders to cover part of a debt payment the utility made on Jan. 1. Prepa accused the bondholders of tightening the conditions on the loan at the last minute.
But under the arrangement announced on Wednesday, the loan will be lowered to $111 million — half to go to Prepa when the Puerto Rico Legislature passes the required legislation, and the other half when the restructuring is approved by the island’s Energy Commission. The restructuring involves a new rate structure for Prepa, and the commission is so new it has not yet conducted a rate-setting process.”
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