Puerto Rico May Default on some Debt in January
Sharon Edmondson, Washington Legislative Team Member | December 30, 2015
Puerto Rico's government will effectively default on some payments owed by government agencies next month.
Gov. Alejandro García Padilla said Wednesday that the territory did not have the money necessary to make all $757 million in bond payments due in January. But Puerto Rico would be able to pay all $328.7 million in general obligation governmental debt service due then as well as approximately $200 million in sales tax bond payments due in February. To make these payments, the governor said that Puerto Rico would drawdown the remaining funds left in bond payment trusts - totaling $383 million - and take back another $163 million in bond payments made since Padilla signed an executive order authorizing such action on Nov. 30. Puerto Rico will also cease making payments to the trust, jeopardizing payments due May 1.
If the commonwealth misses a payment this could prompt a lawsuit that creditors fear might set off a chain reaction of costly extended litigation over who gets paid first. Padilla called for Congress to provide Chapter 9 bankruptcy restructuring and multiple bills have been introduced in Congress, but none have advanced past committee. Senator Hatch (R-UT) believes Puerto Rico should provide its 2014 audited financial statements before further action is taken. House Speaker Ryan (R-WI) has identified March as a potential timeline for a legislative fix.
Recent articles on Puerto Rico Debt Crisis:
Follow-Up to the Debt Problem in Puerto Rico
Puerto Rico Bail Out not Included in the Omnibus Bill
Group of Senators Introduce Puerto Rico bill
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