Puerto Rico Files For Bankruptcy Protection for Public Debt

[SirLinksALot]

SOURCE: US NEWS AND WORLD REPORT VIA REUTERS

URL: https://www.usnews.com/news/world/articles/2017-05-03/puerto-rico-governor-seeks-title-iii-bankruptcy-for-public-debt

by Nick Brown

Puerto Rico's financial oversight board on Wednesday filed for a form of bankruptcy protection under last year's federal rescue law known as PROMESA, touching off the biggest bankruptcy in the history of the U.S. municipal debt market.

The move comes a day after several major creditors sued the U.S. territory and its Governor Ricardo Rossello over defaults on the island's $70 billion in bonds.

The request came under Title III of the PROMESA law is an in-court debt restructuring process akin to U.S. bankruptcy protection, as Puerto Rico is barred from traditional bankruptcy because it is a U.S. territory. The case was filed in U.S. District Court in Puerto Rico.

The process will give Puerto Rico the legal ability to impose drastic discounts on creditor recoveries, but could also spook investors and prolong the island's lack of access to debt markets.

"The governor needed to show that his primary allegiance lies with the citizens of Puerto Rico, and that was the justification for the filing," said David Tawil, whose fund, Maglan Capital, held Puerto Rico GO debt but has since sold it. "I’m not sure whether bondholders are going to get any better treatment or recovery under this course of action."

The legal proceeding does not mean negotiations toward a consensual restructuring agreement must stop, the governor said in a statement on Wednesday.

"It is my hope that the Government’s Title III proceedings will accelerate the negotiation process," the governor said in the statement.

Rossello's fiscal plan for the island, approved by the oversight board in March, forecasts Puerto Rico having only $800 million a year to pay debt, less than a quarter of what it owes. The low figure alienated creditors, and negotiations toward a restructuring deal have foundered.

In addition to its debt, Puerto Rico is facing a 45 percent poverty rate, a shrinking population and unemployment more than twice the U.S. average.

Puerto Rico and its general obligation bondholders, whose $18 billion of debt is backed by the island's constitution, were negotiating until the last minute.

(Excerpt) Read more at above link ...

[driftdiver]

Hows that socialism worken out for ya?

[corbe]

   From a year ago:

Trump opposes Puerto Rico aid

 By Ben Kamisar - 05/04/16 06:07 PM EDT 

   Donald Trump would not support the government assisting Puerto Rico during its debt crisis.

"I don't believe they should do it, and Puerto Rico is better off if they don't because they will cut the bonds, they'll cut them way down," Trump said Wednesday during an interview with CNN about a plan to help the territory deal with its finances.

He told CNN's Wolf Blitzer "I love debt" and referred to himself as the "king of debt" as he explained that he's always used bankruptcy laws to his benefit in his business dealings.
But Puerto Rico is not allowed to declare bankruptcy under U.S. law because of its status as a territory, complicating the issue.

When Blitzer pointed that out, Trump ultimately said that the territory would have "no choice" but to eventually declare bankruptcy.

But granting Puerto Rico the power to restructure its debt is at the center of the legislation in question.

"If they don't have money, can't pay the interest whether they officially declare or not, but ultimately what they're going to do is cut the debt way down. They're never going to pay that debt off; they have to cut it way down, and the United States is going to be in that position real soon," said Trump.

<..snip..>

http://thehill.com/blogs/ballot-box/presidential-races/278771-trump-says-no-to-puerto-rico-bailout

[IsailedawayfromFR]

No one's fault but citizens of Puerto Rico. Let them solve their own mess

[geronl]

"If they don't have money, can't pay the interest whether they officially declare or not, but ultimately what they're going to do is cut the debt way down. They're never going to pay that debt off; they have to cut it way down, and the United States is going to be in that position real soon," said Trump.[/i]

So Trump thinks PR and the US need to default?

[Hondo69]

There are a lot of Puerto Rican voters in NY (just ask Hillary Clinton).  Expect Chuckie Schumer to push for a bailout.