Federal officials are expected to announce incentives to boost Puerto Rico's economy in the next few months, a top legislator from the commonwealth said this week, responding to investor concerns about the island's rising debt costs and bleak growth, Reuters reported yesterday. The help is unlikely to include direct financial aid, Puerto Rico Senate President Eduardo Bhatia said at an investor gathering in New York. The assistance would come in response to the last four years of recession in the Caribbean territory, Bhatia said. It has been given added urgency due to a spike in Puerto Rico's debt yields in the recent months, he said. The selloff in Puerto Rico's bonds has been driven by worries about the territory's shrinking economy, its high jobless rate and its per capita debt. The U.S. commonwealth's unemployment rate is nearly 14 percent, higher than any U.S. state. Puerto Rico has about $70 billion of outstanding debt, or nearly 2 percent of the overall $3.7 trillion municipal bond market. That dwarfs the $18 billion held by Detroit. Puerto Rico's debt is held widely by mutual funds, increasing the systemic risk. The island will not be entitled to file for chapter 9 municipal bankruptcy.
