The U.S. commonwealth of Puerto Rico asked a federal court to dismiss as premature a lawsuit filed by U.S. mutual funds that sought to strike down a recently enacted Puerto Rican law that the funds said posed a threat to American investors, Reuters reported yesterday. The Public Corporation Debt Enforcement and Recovery Act allows certain public corporations to modify their debts, and its passage in June spooked the $3.7 trillion U.S. municipal bond market and weighed on the prices of bonds issued by Puerto Rico's electric authority, known as PREPA. Puerto Rico said that the lawsuit, brought by bond funds run by Franklin Templeton and OppenheimerFunds, was untimely because PREPA had not sought to restructure its debt. Puerto Rico has about $73 billion of debt, of which roughly $19 billion is in its public corporations, according to an estimate by Barclays.
