Officials in Washington, D.C., and San Juan have expected for some time that Puerto Rico would default yesterday on debt owed by its Government Development Bank. When it finally happened, the impact on the markets was muted, which means there may be less urgency to resolve a standoff in Congress over debt restructuring legislation, according to an analysis today on MorningConsult.com. The commonwealth made its default on the debt official over the weekend when Gov. Alejandro García Padilla declared a moratorium on the GDB debt payment and addressed the 3.5 million people of Puerto Rico on television. Importantly, the island did not default on all of the $422 million it owed to GDB creditors. An ad hoc group of creditors negotiated with the San Juan government before the default to allow some of its payment to be delayed. Under the plan, as described by the D.C.-based broker-dealer Height Securities LLC, Puerto Rico will hold off some payment to these creditors, meaning the unpaid amount comes to about $270 million in GDB debt. Read more.
What are the next steps for Puerto Rico to resolve its financial distress? A panel of experts at ABI’s New York City Bankruptcy Conference on May 12 will examine potential remedies. Rates go up on Friday! 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.
