Puerto Rico said that it made all principal and interest payments due yesterday, averting a default on directly guaranteed bonds and allowing the commonwealth to continue talks with creditors to reduce its $70 billion debt burden, Bloomberg News reported yesterday. Governor Alejandro Garcia Padilla signed an executive order to permit the redirection of revenue budgeted for highway and convention center bonds and other agencies to pay for debt issued or guaranteed by the commonwealth, according to a Government Development Bank (GDB) statement. The GDB, which lends to the commonwealth and its agencies, had $354 million in principal and interest payments due yesterday. Garcia Padilla announced the clawback provision during a Senate hearing yesterday, where he received little support for his request to access bankruptcy to help right the commonwealth’s finances. The governor said that the island is running out of cash and will focus on providing essential services while in negotiations with creditors to accept losses on their holdings. It faces another big bond payment at the start of January. Read more.
To watch a replay of yesterday’s Senate Judiciary Committee hearing titled, “Puerto Rico’s Fiscal Problems: Examining the Source and Exploring the Solution,” please click here.
For more news and analysis of Puerto Rico’s debt crisis, be sure to visit ABI’s “Puerto Rico in Distress” webpage.
