Gov. Alejandro Garcia Padilla has not said whether his administration will be able to make the $355 million payment.
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Puerto Rico has avoided complete default on more than $350 million in bond payments due Tuesday, according to Sen.
Another default could have triggered lawsuits, further spooked investors and undermined the island’s efforts to climb out of $72 billion in debt. That was bad. Ted Hampton, Credit Officer at Moody’s, said missing this deadline could be worse. Daniel Hanson, a Height Securities analyst closely following Puerto Rico, said in a November 25 note that a default could put GDB into receivership, which would “almost certainly result…in a stay” on its ability to move cash and, in turn, on the government’s ability to support operations.
“Merely extending debt restructuring authority, absent tools to address the fundamental causes of the fiscal problem, is not a long-term solution that will help Puerto Rico”, said Judiciary Committee Chairman Charles Grassley, R-Iowa.
Puerto Rico will begin taking revenue that now repays certain bonds and use that money for other government expenses, called a “clawback”, Garcia Padilla told the committee.
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“We are reduced to the role of supplicant, pleading for equal treatment, or at least more equitable treatment”, Pierluisi said. “Since Congress has, up until this point, failed to take action, leaders from across the country are bringing the urgency of this crisis to Congress’ doorstep to demand justice”.
