A pair of Wall Street investment firms is challenging Puerto Rico's new law allowing some public agencies to restructure their debt, saying that it violates the U.S. Constitution, the Wall Street Journal reported today. Funds managed by Franklin Templeton Investments and OppenheimerFunds Inc. asked the U.S. District Court for the District of Puerto Rico to block the law, arguing that only Congress is allowed to create bankruptcy rules. The funds hold about $1.7 billion combined in debt from the Puerto Rico Electric Power Authority, which they say they believe will seek to restructure its debt under the act "imminently." Puerto Rico lawmakers last week approved legislation allowing some agencies such as the island's power, water and transportation authorities to restructure their debt. Those agencies have a combined $19.4 billion in bonds outstanding, according to estimates from Barclays PLC. The law doesn't apply to Puerto Rico's general-obligation or sales-tax bonds, which are backed by the island's taxing authority.
