Puerto Rico’s House of Representatives approved a bill to allow the island’s main water utility to issue debt with a stronger repayment pledge, a step aimed at allowing the agency to raise money needed to avoid missing payments on other bonds, Bloomberg News reported yesterday. The measure was approved by a vote of 35 to 10, according to Michelle Gonzalez, spokeswoman for House Speaker Jaime Perello. The legislation enables the Puerto Rico Aqueduct and Sewer Authority (PRASA) to create a new corporation to sell securitization bonds, which would be backed by revenue that goes directly to repaying the debt rather than flowing through PRASA’s accounts, according to Rafael “Tatito” Hernandez, sponsor of the legislation and chair of the House Treasury Committee. Bond proceeds would finance capital projects and pay contractors. Read more.
In related news, Congress should make legislative changes intended to allow Puerto Rico to better address its debt crisis, but those changes shouldn’t include providing federal funds or allowing the island the declare chapter 9 bankruptcy, according to Heritage Action for America, MorningConsult.com reported. Bankruptcy “would be an example of Congress changing the rules of the game to the benefit of some and at the expense of others,” the political arm of the Washington, D.C.-based Heritage Foundation wrote in a March 10 memo. Instead, the group recommended two legislative fixes that conservatives say would help the commonwealth’s economic growth problem, which the memo characterized as the main challenge facing Puerto Rico. Heritage Action suggested repealing the Jones Act, which prohibits ships that aren’t built in the U.S. from transporting goods between two U.S. ports. Heritage also recommended allowing Puerto Rico’s government to set its own minimum wage. Read more.
For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage.
