Puerto Rico has been anxious for Congress to address its $70 billion debt crisis, but the island’s leaders may not be as happy with the potential outcome as the investors holding its securities, Bloomberg News reported today. Driving the process are Republicans, who control both chambers and say that the island has proved it’s not able to manage its finances and needs an external authority to ensure it cuts expenses and deficits. Democrats, essential to passing a bill in Senate, insist on giving Puerto Rico access to an orderly, court-supervised process allowing it to cut its debt. “What may pass may be a mixture of both, possibly a control board with some sort of restructuring access, some leeway in allowing them to restructure some of their debt,” said Shaun Burgess, a portfolio manager at Cumberland Advisors Inc. in Sarasota, Fla. “The island needs some real management and structural help and not just the ability to cram down or restructure their debt.” Read more.
In related news, Sen. Elizabeth Warren (D-Mass.) is tying a long-brewing battle over the Puerto Rico financial crisis to an energy bill currently before the Senate, The Hill reported today. The Massachusetts Democrat is offering an amendment to a wide-ranging energy reform bill from Sen. Lisa Murkowski (R-Alaska). Warren's proposal would help temporarily protect Puerto Rico from debt collectors until April 1. Democratic Sens. Richard Blumenthal (Conn.), Kirsten Gillibrand (N.Y.) Bob Menendez (N.J.), Chris Murphy (Conn.), Bill Nelson (Fla.) and Charles Schumer (N.Y.) are backing Warren's amendment. The senators argue that "a temporary stay on litigation is essential to facilitate an orderly process for stabilizing, evaluating, and comprehensively resolving" Puerto Rico's crisis. A vote on the amendment hasn't been scheduled, but trying to link the two issues would place a deeply partisan fight into an otherwise uncontroversial energy bill. Read more.
Additionally, the House Natural Resources Subcommittee on Indian, Insular and Alaska Native Affairs will hold a hearing tomorrow at 11 a.m. ET titled “The Need for the Establishment of a Puerto Rico Financial Stability and Economic Growth Authority.”
Experts gather this week San Juan to discuss Puerto Rico's economic distress and other important cross-border insolvency topics at ABI's Caribbean Insolvency Symposium. 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.
