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A private sector coalition of over 20 trade associations is speaking with a single voice and asking Congress to grant Puerto Rico the right to allow its public corporations access to protections under chapter 9 of the U.S. Bankruptcy Code, according to a commentary on the Huffington Post on Friday. From a business perspective, the commentary says that chapter 9 is part of the solution to Puerto Rico's complicated debt and liquidity crisis. The alternative — doing nothing and watching bondholders subject Puerto Rico to years of litigation and chaos — would be a disaster for a business community that thrives on predictability and order. If subjected to a long and disorderly process, the commentary argues that this unsustainable burden would leave Puerto Rico with little chance to grow its own economy. Chapter 9 would provide an orderly legal process — guided by a federal judge — to restructure what its public corporations owe and give our island the chance to fight for its future.

Puerto Rico on Friday asked the U.S. Supreme Court to overturn a ruling that blocks the restructuring of the commonwealth's public agencies, as the island grapples with trying to restructure its huge debt load, Reuters reported on Friday. In a petition seeking the Court's review, Puerto Rico said that a lower court erred in concluding that U.S. bankruptcy law blocks the restructuring of the agencies' debts. Puerto Rico also said that the lower court decision leaves its public utilities in a legal "no man's land" because neither federal law nor the island's own law permits the needed restructuring. "That decision leaves Puerto Rico's public utilities, and the 3.5 million American citizens who depend on them, at the mercy of their creditors," the commonwealth said. "This court's review is warranted — and soon." Read more. 

In related news, Puerto Rico today sought to assure potential buyers of bonds being sold by the local water authority that the utility does not require restructuring at this time, Reuters reported. Víctor Suárez Meléndez, the top aide to Governor Alejandro García Padilla, said that the fact that the water authority, known as PRASA, is seeking to sell around $750 million in bonds at the same time that Puerto Rico is appealing a court ruling that struck down a local restructuring law does not mean that PRASA will seek to restructure its debt if the U.S. territory succeeds in the appeal. "Assuming PRASA's financial projections are met and the utility is able to access the market on reasonable terms and for sufficient amounts to cover its capital needs, we currently do not contemplate PRASA necessitating a restructuring of its debt or seeking protection under the Recovery Act or any similar law," Melendez said. Read more. 

Puerto Rico’s first bond issue since the commonwealth defaulted on a debt payment has been pushed out to Thursday at the earliest as investors evaluate the risk of the island’s restructuring plans, Bloomberg News reported yesterday. “It’s just to give investors time to do their work on the credit,” said Lyle Fitterer, who helps oversee $38 billion of municipal securities, including Puerto Rico debt, at Wells Capital Management in Menomonee Falls, Wis. Fitterer had been in contact with underwriters of the securities. The $750 million issue by the Puerto Rico Aqueduct & Sewer Authority, known as PRASA, had been tentatively scheduled to be priced yesterday, according to a presentation to investors last week.

Puerto Rico’s main water utility plans to sell $750 million of revenue bonds, the first debt offering from the financially struggling Caribbean island since it defaulted on securities sold by one of its agencies last week, Bloomberg News reported yesterday. The deal may price as soon as next week. It will follow the Public Finance Corp.’s failure to make a full bond payment on Aug. 3 and comes just weeks before the commonwealth is set to propose a plan for restructuring its $72 billion of debt. Melba Acosta, the island’s top debt chief, doesn’t foresee the water agency reorganizing its obligations in such a move. The utility’s sale will test Puerto Rico’s ability to access the capital markets. Governor Alejandro Garcia Padilla in June said that the U.S. territory can’t afford to repay what it owes as the population falls and the economy struggles to grow. Its bond prices have dropped amid speculation about the scale of the losses facing investors.