Puerto Rico’s fiscal agent has hired another well-known restructuring law firm, raising the specter that the financially troubled island is preparing to revamp its finances, the New York Times DealBook blog reported yesterday. The Government Development Bank for Puerto Rico, which oversees all of the commonwealth’s debt deals, said it had hired Cleary Gottlieb Steen & Hamilton. The development bank declined to say whether Cleary had been hired as part of an effort to restructure the commonwealth’s debt. Cleary has represented many financially challenged government clients, including Greece, Iraq, Iceland and Argentina. Puerto Rico investors worry that a restructuring could result in large losses on their bond holdings as the government seeks to reduce its debt load. Unlike Detroit and other United States municipalities, Puerto Rico cannot file for federal bankruptcy protection, making the prospect of a restructuring by the commonwealth potentially even more uncertain to creditors because there is no clear template.
