Puerto Rico will default on a portion of the nearly $1 billion in debt obligations due to its bondholders on Jan. 4, CNBC.com reported yesterday. Top officials for the commonwealth have confirmed that it will not be able to make two out of the 13 total payments due Monday to bondholders. Puerto Rico will default on a $35.9 million payment on the Puerto Rico Infrastructure Financing Authority, and a $1.4 million payment on the Puerto Rico Public Finance Corporation. The remaining bonds will be paid, including $329 million due to general obligation bondholders, in which half of the payment, $163 million, is from the revenues clawed back from the Highways & Transportation Authority, the Infrastructure Financing Authority and the Convention Center District Authority bonds. Read more.
Ambac Assurance warned Puerto Rico's governor on Tuesday over what it said was his illegal plan to take rum tax revenue pledged to the Puerto Rico Infrastructure Authority (PRIFA) and use it to meet other financial obligations ahead of a key debt payment tomorrow, Reuters reported on Tuesday. Ambac Assurance and Financial Guaranty Insurance Company (FGIC) and its parent company, Ambac Financial Group, insure more than $863 million in aggregate outstanding principal amount of bonds issued by PRIFA. Governor Alejandro Garcia Padilla on Dec. 1 granted the U.S. territory the power to take revenues from public agencies like PRIFA via "clawbacks." In a letter to Garcia Padilla and members of PRIFA, the companies complained that as much as $94 million in rum taxes securing the PRIFA bonds were diverted even before Padilla announced the policy change, saying no money had come into a bondholder trust account known as a "sinking fund" since the beginning of September. Read more.
The December episode of "Eye on Bankruptcy" was devoted to Puerto Rico, featuring remarks by Rep. Pedro Pierluisi, Judge Steven Rhodes and an analysis of the coming Supreme Court argument on whether the Recovery Act was pre-empted by the Bankruptcy Code.
Join experts in San Juan to discuss Puerto Rico's economic distress and other important cross-border insolvency topics at ABI's Caribbean Insolvency Symposium, Feb. 4-6, 2016. Click here to register!
For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage.
