After three years of negotiations, Puerto Rico’s federal overseers are at last finishing up a plan to complete the restructuring of the island’s roughly $124 billion in debt. To resolve the biggest government financial collapse in U.S. history, they have had to untangle the island’s thorny finances, negotiate with creditors and figure out how to do it without endangering the livelihoods of retirees who rely solely on their pensions, the New York Times reported. That may have been the easy part: Some of the island’s creditors — including the hedge fund Aurelius Capital Management, which held up Argentina’s debt settlement for years for a better deal — will almost certainly challenge the plan on the ground that it violates the territory’s 1952 Constitution. At the center of it all are two intertwined issues. The oversight board wants to cut back the amount paid to some of those who hold the territory’s debt while also giving an unexpectedly good deal to more than 300,000 workers and retirees, some of whom do not even have Social Security. The good deal for the pension holders means a worse one for the holders of Puerto Rico’s debt. Read more.
In related news, the administration of Puerto Rico Gov. Ricardo Rosselló was engulfed in crisis as top officials resigned and political allies in the U.S. territory withdrew their support after a trove of private messages were leaked, the Wall Street Journal reported. Puerto Rico’s former Chief Financial Officer Christian Sobrino and Secretary of State Luis Rivera Marín resigned their positions on Saturday, after the disclosure of nearly 900 pages of private messages between Gov. Rosselló and top administration officials that included vulgar insults toward prominent public figures. The messages, exchanged on the encrypted-messaging app Telegram, put more political pressure on an administration that was already shaken last week after two former high-ranking officials were indicted on federal corruption charges. Read more. (Subscription required.)
