Puerto Rico would place restrictions on its future debt sales under proposed legislation that won praise yesterday from the bankrupt U.S. commonwealth’s federally created financial oversight board, Reuters reported. Puerto Rico’s bankruptcy takes up the bulk of the island’s $120 billion of debt and pension obligations and analysts have raised questions about the island’s future market access due to the board’s attempt to void some outstanding bonds. Under legislation backed by Governor Wanda Vazquez Garced, the Puerto Rico Fiscal Agency and Financial Advisory Authority would be charged with developing a policy for the government and its public corporations that sets a limit on tax-backed debt. The agency would also have to approve any debt issuance, which would be limited to maturities of no more than 30 years with proceeds allocated for only capital improvements. Principal payments would be required to begin within two years of issuance. The board said it welcomed a policy to prevent a repetition of “irresponsible fiscal management and debt issuances” that led to the island’s financial crisis and subsequent 2017 bankruptcy filing. The bill now heads to the legislature, where support for the measure was unclear.
