Puerto Rico Governor Alejandro García Padilla suggested yesterday that the commonwealth’s central government may not be able to borrow from the $3.7 trillion municipal bond market any time soon, as the uncertainty of restructuring the island’s $70 billion debt and its continuing recession weigh on its shrinking population, MarketWatch.com reported. “I think it would take a couple of years, maybe two years for the bond market to open to Puerto Rico if we do the right thing,” García Padilla said yesterday. The governor, not running for re-election in November, said that for Puerto Rico’s economy to grow, the White House needs to give Puerto Ricans a larger share of benefits from Medicare and Medicaid. He also said that Congress needs to grant new corporate incentives to the island similar to the now expired Section 936 of the tax code, which exempted U.S. companies from paying federal tax with revenue originated from U.S. territories, including Puerto Rico. President Barack Obama signed a bill on June 30 to create a seven-member federal board to oversee the commonwealth’s finances, restructure its $70 billion debt, and shield the island from creditor lawsuits. Puerto Rico defaulted on July 1 on about half of the $2 billion bond payments due. Puerto Rico cannot file for bankruptcy protection under current law. Read more.
For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage.
