Puerto Rico To Default On Some Bonds January 1 – Live Feed
- PUERTO RICO SAYS IT WILL DEFAULT ON SOME DEBT DUE JAN. 1
- PUERTO RICO TO MISS $1.4 MILLION DUE ON PFC BONDS DUE JAN. 1
- PUERTO RICO TO MISS $35.9 MILLION DUE ON PRIFA BONDS
- PUERTO RICO TO MAKE JAN. 1 GENERAL OBLIGATION DEBT PAYMENT
Nearly $1 billion comes due on Friday, some $330 million of which is GO debt. Because a full payment is next to impossible, Padilla must decide who gets paid and who doesn’t. Live feed:
And the reaction in the monolines:
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Background
In what’s starting to feel a bit like the Greek saga that unfolded over the summer, Puerto Rico is facing another “D-Day” on January 1 when nearly $1 billion is due to creditors.
For those unfamiliar with the story, the commonwealth is struggling to crawl from under a debt pile that sums to about $70 billion but has thus far been unable to wrench concessions from Congress on restructuring in bankruptcy.
Earlier this month, the island struck a deal with the monolines that will let a previously agreed restructuring for around $8 billion in PREPA debt go ahead, and while some hope that could serve as a kind of template for the rest of Puerto Rico’s obligations, analysts and government officials alike think that’s unlikely given the complexity involved.
On December 1, Governor Alejandro Garcia Padilla used a revenue clawback mechanism in order to make a $354 million payment. The end-around effectively allowed Padilla to divert funds from other agencies that have issued bonds in order ensure the government could make good on its GO debt. A default on the GO portion (around $330 million) of what comes due on Friday would trigger a wave of messy litigation and is a situation Padilla wants to avoid at all costs.
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