Last week, the Obama administration doubled down on efforts to aid Puerto Rico by proposing to change American law to allow the territory and its municipalities to seek bankruptcy protection, according to a commentary in The City Journal. The “Roadmap for Congressional Action” on Puerto Rico seems more calculated to embarrass Republicans than to find an actual solution to the deeply indebted island’s problems, according to the commentary. Republicans had serious concerns about previous Puerto Rico bailout proposals. Instead of dismissing it, Republicans should demand more substantial concessions on union-friendly federal policies that have helped deep-six Puerto Rico’s economy, according to the commentary. Read more.
In related news, a group of investors holding Puerto Rico’s general-obligation bonds have hired restructuring adviser Goldin Associates LLC to represent them as the commonwealth seeks to reduce its debt burden, Bloomberg News reported yesterday. Goldin Associates will advise the general-obligation group in debt discussions. Puerto Rico and advisers to groups holding the island’s various bonds are set to meet today at Cleary Gottlieb Steen & Hamilton LLP’s New York office to discuss the island’s projected liquidity. The law firm has been representing the commonwealth in its plan to reduce its debt obligations. The general obligation bondholder group splintered from a broader coalition of more than three dozen firms that held $5.2 billion of Puerto Rico debt. Puerto Rico has $13 billion of general obligation debt which its constitution stipulates must be repaid before other expenses. The next payment to bondholders is $357 million of interest, due Jan. 1. Read more.
For more on Puerto Rico’s debt crisis, be sure to visit ABI’s “Puerto Rico in Distress” webpage.
