“Frankly the risk in Puerto Rico is that bonds aren’t cut enough initially to create a sustainable base”, he said.
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“The government has known the GDB was a ticking time-bomb and yet nothing constructive was done to forestall a default”, said Arturo Porzecanski, economist and sovereign debt expert at American University in Washington, adding that “the approach is symptomatic of all that is wrong with how Puerto Rico has dealt with its deteriorating financial situation”. Puerto Rico expects multiple lawsuits to be filed shortly after Monday’s default. The GDB had $562 million available for paying debt as of April 1, according to the government.
The GDB, Puerto Rico’s primary fiscal agent, said in a statement on Friday that it was still negotiating with other creditors in hopes of avoiding default on another $422 million due on Monday. [Image via Spencer Platt/Getty Images]This missed payment by the GDB may pave the way to even bigger problems for Puerto Rico courtesy of larger defaults. Bitcoin would be a likely candidate to take the place of the legacy system, especially in a region where solutions are direly needed. The development comes as Congress has so far been unable to pass a debt restructuring bill for Puerto Rico.Let me be very clear, this was a painful decision, Garcia said in a speech.
Puerto Rico and its agencies owe $70 billion after years of borrowing to fill budget shortfalls as the island’s economy contracted. “No, I don’t see the timeline”, he said, giving a major boost to the hedge funds waging a fierce, non-traditional public relations and lobbying campaign aimed at pushing Puerto Rico toward a default and profiting in the event of it. The hip-hop musical Hamilton may have saved the founder of the USA fiscal system from being replaced on the $10 bill, and now creator Lin-Manuel Miranda wants to use it to effect another rescue for Puerto Rico.Natural Resources Committee Chairman Rob Bishop, R-Utah, says he is reworking the bill. “We need this restructuring mechanism now”. “But as the effects of a decade-long economic recession have mounted, Puerto Ricans – who are USA citizens at birth – have increasingly moved to the U.S. mainland, with many settling in Florida”.
“This is where Puerto Rico’s unwinding begins”, he said in an interview Sunday night.
Optimism for a deal has been low, with Governor Alejandro Garcia Padilla saying this week that “there will be a default on Monday”, and a source close to talks telling Reuters there is “no indication” of progress on a deal.
With those few words, the bankruptcy protections that applied to every U.S. state, and until 1984 to Puerto Rico, were eliminated.
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There are many reasons why Puerto Rico has racked up so many IOUs. Some of that debt carries some of the commonwealth’s strongest legal pledges.
