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Puerto Rico Gov. Ricardo Rosselló has asserted a commitment to paying Puerto Rico’s creditors and has said that doing so is likely to require restructuring the debt, according to a Wall Street Journal commentary today. Rosselló’s most immediate problem, according to the commentary, is the liquidity crisis sparked by former Gov. Alejandro García Padilla’s initiatives — dating to at least 2014 — seeking bankruptcy protection. Puerto Rican debt service amounted to only about 16 percent of the consolidated budget in 2016. But with money tight, Mr. García Padilla was unwilling to cut expenses. Instead he decided not to pay the debt service, and the island lost access to credit markets. The former governor signed a debt-moratorium law in April and used it in June after Washington gave the government shelter under PROMESA. The act grants the commonwealth a stay on litigation, which can be extended to May 1. It also mandates that Puerto Rico present a certifiable fiscal plan to PROMESA’s independent financial-control board before Jan. 31. That plan will be used as a basis for creditor negotiations. If the talks fail, the parties go to a judge.

Puerto Rico's new governor is seeking more time to present a fiscal turnaround plan for the struggling U.S. territory, saying the the Jan. 31 deadline set by the commonwealth's federal oversight board is too tight, Reuters reported. In a letter to the board dated Jan. 4, a representative for Governor Ricardo Rosselló, who was sworn in last Monday, sought at least a 45-day extension, which would push the deadline to present a plan to March 17. Under the territory's federal rescue law known as PROMESA, passed last year, Puerto Rico's governor has to present a blueprint for the island's financial future that must be approved by the federally-appointed board tasked with managing its dire fiscal position. The board last year set a Jan. 31 deadline for the plan, but Elias Sanchez, Rosselló’s liaison to the board, said that the deadline would give the administration too little time to assess Puerto Rico's finances or attempt restructuring talks. The governor also sought a 75-day extension of PROMESA's so-called automatic stay provision, which prevents creditors from suing Puerto Rico over missed debt payments. With the stay set to expire on Feb. 15, Rosselló asked the board to extend it until May 1. Read more.

For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage. 

Puerto Rico's new governor wasted no time seeking advisers to help the island restructure $70 billion in debt, requesting late on Tuesday that firms submit their qualifications as legal and financial advisers, Reuters reported yesterday. Governor Ricky Rossello, who was sworn in on Monday, had sharply criticized the financial policies of his predecessor, Alejandro García Padilla, during the 2016 campaign. García Padilla pushed for sharp reductions in debt payments to Puerto Rico's creditors and ordered several defaults during his term. Rossello, who favors U.S. statehood for the island, believes it should try to limit such cuts while imposing belt-tightening measures like consolidating public agencies. Firms have until Friday to submit their qualifications. Those that have represented Puerto Rico's creditors are not barred from vying for a contract. Read more. 

For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage. 

Outgoing Puerto Rico Governor Alejandro García Padilla urged his successor to demand that a federal control board overseeing government finances move immediately to restructure much of its nearly $70 billion in debt, the Associated Press reported on Saturday. García Padilla told incoming Governor Ricardo Rossello in a letter released on Friday that the commonwealth cannot afford to pay $3.5 billion in annual debt service. García Padilla said that Puerto Rico faces $3 billion in additional liabilities by 2018 after federal health care funding sources and pension system assets are depleted and warns that action is needed before a litigation stay against creditor lawsuits expires in February. The board can restructure debt through a court-supervised bankruptcy process but board chairman Jose Carrion has said it will try to reach voluntary deals with creditors. Rossello took office yesterday. Read more. 

For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage. 

A federal control board overseeing Puerto Rico's finances gave the governor a list of proposed measures to turn around the U.S. territory's economy including downsizing the government, privatizing ports and charging tourists more for certain services, the Associated Press reported. The board, created by PROMESA, warned that Puerto Rico needs to take swift action because it faces a larger deficit than originally projected at $68 billion, in addition to nearly $70 billion in public debt the governor has said is unpayable and needs restructuring. Board members said that the new projected deficit is $10 billion larger than the one included in a proposed fiscal plan that has become a point of contention between the board and Puerto Rico's governor. The board last month rejected the plan submitted by Gov. Alejandro Garcia Padilla, who has refused to revise the plan to include any austerity measures. Read more.

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Puerto Rico said it may run out of cash by February if it’s forced to cover bond payments, underscoring the pressure that’s causing the island to default on a growing share of its $70 billion debt, Bloomberg News reported yesterday. The commonwealth projects that it will have a deficit of at least $2 billion in the year ending June 30 unless a debt-moratorium law is kept in place, according to a Dec. 18 report from the Government Development Bank. The law is scheduled to lapse on Jan. 31, after Governor-elect Ricardo Rossello is sworn in, though the governor can extend it by another two months. Puerto Rico skipped about $1.5 billion of bond payments through September as Governor Alejandro García Padilla conserved cash to keep the government running. The commonwealth is facing another round of large debt payments in February. A federal board created to steady the island’s finances is working on approving a fiscal plan before those payments are due. Rossello will have to work with the seven-member board to find a way to restructure the government’s debt. Read more. 

For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage.