Puerto Rico may suspend principal and interest payments on its bonds in less than three months as the island struggles to cover health and safety programs, Bloomberg News reported yesterday. The potential halt on debt-service payments comes as the commonwealth’s Government Development Bank faces a $422 million debt payment May 1. Puerto Rico and its agencies owe investors $2 billion on July 1, including $805 million for general-obligations, according to data compiled by Bloomberg. The island is debating whether to make the debt payments because it doesn’t have the funds to continue providing essential services, Grace Santana, chief of staff to Governor Alejandro Garcia Padilla, told reporters Wednesday in San Juan. The island warned in its debt-restructuring proposal released earlier this month that it may need to stop making such payments if it can’t reach a deal with investors to restructure its debt by May 1. Read more.
In related news, U.S. officials held a roundtable discussion at the White House on Tuesday about the "worsening" fiscal crisis in Puerto Rico, as the Obama administration continues to press Congress to act on the issue, Reuters reported. The meeting with Puerto Rican labor leaders and business executives featured briefings from Treasury Secretary Jacob Lew and Secretary of Health and Human Services Sylvia Burwell. Lew told meeting participants that Puerto Rico has already had to take extreme emergency measures like borrowing from its pensions to stay afloat and the island will face additional strain in May and June, when more than $2 billion in debt payments come due. Read more.
For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage.
