Posted on 07/02/2014 12:01:55 PM PDT by cll
A move by Puerto Rico to allow some public companies to restructure their debts has rattled the $4tn US municipal debt market, sparking a credit downgrade by a leading rating agency.
Alejandro Garcia Padilla, the island’s governor, signed a bill at the weekend that allows some of its largest utilities, such as the Puerto Rico Power Authority, to negotiate with bondholders to reduce their mounting debt loads.
The bill was seen as a departure from the Caribbean island’s commitment to bondholders.
Moody’s on Tuesday cut its credit rating on the US territory to B2 from Ba2, deeper into “junk” territory, after a warning that the new legislation provided “a clear path to default” for public companies. Standard & Poor’s also signalled it may cut Puerto Rico’s credit rating within 60 to 90 days.
Unlike some US municipalities, the constitution of Puerto Rico, a US territory, prevents the government and public companies from seeking protection from creditors in bankruptcy courts. While some public companies could default under the new law, officials were adamant it did not apply to bonds issued and backed directly by the commonwealth, which make up the bulk of the island’s $73bn debt.
(Excerpt) Read more at ft.com ...
For as long as I can remember, all kinds of things have been tried to help the PR economy, like business tax breaks, and nothing’s worked, I guess. I even remember when the newly elected Republican Governor, Luis Fortuna, was kind of a rock star at a GOPAC convention. But I guess he couldn’t turn things around either.
And the idiot Bush family and their minions have been trying forever to get PR to become the 51st state.
Anyway, as America becomes Latinized, is this our future, too?
Insist that Spain has to take back Puerto Rico with no returns.
Hmmm...
Puerto Rico’s economy is a mess.
Let’s see: a debt of about $73 billion, which comes to about 20,000 per person in P.R.
But then, I look at the per person debt for the U.S. national debt, and it comes out to about $60,000 per person.
So, why isn’t the U.S. “enjoying” junk status on its bonds too?
Truly sad.
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