U.S. Senate Democratic leader Harry Reid said yesterday that amendments were necessary to a Puerto Rico debt bill that Senate Majority Leader Mitch McConnell said would be voted on by next week, Reuters reported yesterday. Reid said that changes were needed to the federal board overseeing the restructuring of Puerto Rico's $70 billion debt under the bill, but he did not say whether Democrats would be successful in making any changes. The House of Representatives passed a Puerto Rico debt relief bill on June 9, following months of internal debate. Supporters hope the Senate passes that bill, without any amendment, before July 1, when Puerto Rico faces a deadline for making a $1.9 billion debt payment. The commonwealth, which is a U.S. territory, is suffering a poverty rate of about 45 percent and has been hobbled by worsening debt problems. Some schools and medical facilities are closing and thousands of residents are relocating to the U.S. mainland, further shrinking Puerto Rico's tax base. While Reid said he had "some serious concerns" with the current bill, which was negotiated by the Obama administration and lawmakers in the House, he did not say whether he expected any amendments to succeed in the Senate. Read more.
In related news, Puerto Rico drew back the curtain on its talks with bondholders, underscoring how far apart the sides remain in a fight over the restructuring of $70 billion of municipal debt, the Wall Street Journal reported today. Puerto Rico’s Government Development Bank yesterday disclosed terms of various restructuring proposals discussed in negotiations that have ended. The talks included a committee representing investors in the commonwealth’s general obligation bonds, a group holding senior sales-tax-backed, or “Cofina,” bonds, and a single investor with large holdings of general obligation bonds and junior Cofina bonds, according to the disclosure. Uncertainty about a looming U.S. congressional vote on a restructuring framework for Puerto Rico has made it difficult for the island to come to terms with the various creditor groups, investors and analysts said. Neither the island nor its bondholders are likely to agree to a deal until rules are worked out on Capitol Hill, they said. Read more. (Subscription required.)
For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage.
