Republicans on the House Natural Resources Committee yesterday introduced a new measure aimed at giving Puerto Rico the tools to restructure about $70 billion in debt, MorningConsult.com reported today. The legislation — H.R. 5278, sponsored by Rep. Sean Duffy (R-Wis.) — includes several “minor” changes to the previous measure, H.R. 4900, according to Committee Chairman Rob Bishop (R-Utah). According to a Natural Resources Committee summary, the new measure would block a new Labor Department overtime rule from applying to Puerto Rico. The changes also include language that clarifies the fiscal oversight board’s authority to protect prioritized payments to bondholders. Those payments are required by the commonwealth’s constitution. The legislation also bars Puerto Rico’s governor “from executive any budgetary adjustment” between the enactment of the bill and the establishment of its oversight board, and has language to “reiterate the promotion of voluntary restructuring agreements and explicitly honor voluntary agreements that are already in place,” the summary said. Click here to read the bill summary prepared by the House Natural Resources Committee.
Click here to read Rep. Pedro Pierluisi’s statement on the new Puerto Rico legislation.
In related news, Puerto Rico Governor Alejandro García Padilla declared a state of emergency for the island’s Highways and Transportation Authority, suspending the transfer of toll-road revenue to bondholders and imposing a stay on legal claims, Bloomberg News reported yesterday. While the order doesn’t establish a moratorium on bond payments, it halts a revenue stream to investors that wasn’t subject to the “clawback” initiated last year on fuel taxes to pay holders of commonwealth guaranteed obligations. Standard & Poor’s said in a report last month that Puerto Rico will make its July 1 debt service payments of $220.7 million on highway securities by tapping reserve funds. It might not have enough stored away to pay in January, the ratings company said at the time. Read more.
For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage.
