Puerto Rico Declares Bankruptcy...

Does the rest of the US really need Puerto Rico? Unless there is an important naval base or some major strategic advantage to having it, why don't we just grant it independence? Is there something of value I'm not seeing? It looks like a big money pit to me.
Puerto Rico was of vital importance during the cold war. The US government ped'd its economy to show Cuba that capitalism owns communism. Then the cold war ended and the US basically gave Corporations the green light to rape every last cent from the Island.

Puerto Ricans fought in WW2, the korean war(65th infantry conducted the last ever regimental sized bayonet charge in military history just to give you an idea of the kind of action they we're involved in), Vietnam, and more recently Iraq and Afganistán.

This island has contributed as much to the united states as any other states, don't be a dick.
 
Puerto Rico unveils revised fiscal plan:
No debt service payments for the next 5 years

Dawn Giel | Thu, 25 Jan 2018

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Puerto Rico Governor Ricardo Rossello submitted a revised fiscal plan for the bankrupt island which sees zero debt service payments over the next five years, and lays out the initial process for the privatization of the island's beleaguered power utility.

The previous fiscal plan, which was certified by the federally appointed oversight board in March 2017, covered a 10-year period and allocated around $787 million per year for debt service payments. That amounted to less than a quarter of the $3.5 billion owed to creditors every year.

After the destruction of Hurricane Maria, it was decided that the fiscal plan needed to be revised to reflect the new reality the already cash-strapped island was facing. The revised fiscal plan for Puerto Rico's central government covers a reduced time frame of five years and allocates nothing to creditors, while guaranteeing retirement pensions.

An addition to the revised fiscal plan is an expense for Title III proceedings, which is the bankruptcy-like that a federal judge is currently overseeing for the island's outstanding bond indebtedness of roughly $73 billion, or nearly $17,000 debt per capita.

Moody's Investors Services notes that specific bondholder recoveries "will likely emerge after judicial proceedings or negotiations, and would be determined by economic projections and relative strengths of bondholder claims," said Ted Hampton, VP and Senior Credit Officer at Moody's.

The Commonwealth expects expenses for its government to increase over the five-year period, while projecting a cumulative decline in population of 19.4 percent over the same time period.

The plan also includes an injection of $35.3 billion in federal aid from FEMA, although it anticipates receiving "significantly more" and has previously requested $94.4 billion in Federal Disaster Relief Assistance.

Approximately 51 percent of that federal aid is intended to be allocated to repair, modernize and strengthen the island's crumbling water and power infrastructure.

However, even after all government transformation initiatives and structural reforms are implemented, Puerto Rico still foresees have a funding gap of $3.4 billion through fiscal 2022. As a result, the island's government believes a liquidity facility will be needed to bridge the gap.

PREPA's revised plan
Puerto Rico's Electric Power Authority (or "PREPA") is one of the largest public power utilities in the US, serving 1.5 million customers with total revenues of $3.4 billion, total assets of $9.4 billion and total liabilities of $11.4 billion in fiscal 2017.

A key challenge highlighted in the fiscal plan is that a significant amount of emergency federal funding is needed to alleviate PREPA's immediate liquidity shortfalls. The plan sees three buckets of funding as options: Community Disaster Loans (or "CDL") from the U.S. Treasury, FEMA Emergency Funding Commonwealth Bridge loans to cover essential current and near-term government functions in advance of receiving a CDL.

The governor's intended transformational plan for PREPA, which he announced on Monday, was included in the fiscal plan.

PREPA's transformation assumes that the utility will cease to operate in its current from in the next 18-months with the island aiming to sell the existing PREPA generation assets to private investors. It also includes development of new generation and a concession model for the power transmission and distribution (or "T&D") system (for example, the system would still be owned by the Government of Puerto Rico, but would have a private operator).

The terms of concession are listed as "to be determined, but likely medium to long-term," with the concessionaire having the right to collect all revenues, and the responsibility to pay all costs, generated by the T&D system.

Rep. Rob Bishop, R-UT, the chairman of the House Natural Resources Committee and key figure in crafting PROMESA, called for full transparency in the PREPA transformation process, saying it "cannot be done behind closed doors."

"It is imperative the Oversight Board and Governor fully integrate those who hold the debt into the development of these plans, thereby guaranteeing accuracy and transparency in the underlying assumptions," Bishop said in a statement issued Thursday.

Bishop also weighed in on what he views as a legal necessity for PREPA's fiscal plan.

"The Board's stated goal under PROMESA is to return Puerto Rico to fiscal accountability and the capital markets, and this can only occur if the fiscal plans respect the lawful priorities and liens of debt holders," he said.

A sentiment echoed by Assured Guaranty, which has approximately $853 million of net par exposure to PREPA's debt as of Sept. 30, 2017.

The insurer issued a strongly worded statement on Tuesday night that urged any potential privatization partners or investors to look at if the Commonwealth's plan adheres to the laws set by PROMESA and the U.S. Constitution.

"The system cannot be sold free and clear of the lien on revenues unless the lien is discharged through full payment of the bonds, there is adequate coverage of debt service after any sale of assets, or the bonds are given the full value of their collateral through a confirmed plan of adjustment," the insurer said in the statement.

PREPA's bonds are secured by a lien on the electric utility system revenues, and are further supported by covenants and Puerto Rico law that ensure the electricity rates are sufficient to cover all costs including debt service.

The plan to privatize also sparked concerns with a separate group of PREPA creditors which hold around $3.3 billion of PREPA's bonds.

"We believe the only path for any proposal to deliver low cost and reliable power will be if it respects property rights, since failure to do so will result in years of litigation from multiple parties," a written statement issued on Monday by the Ad Hoc Group of Bondholders said. The group includes hedge funds BlueMountain Capital and Marathon Asset Management, as well as mutual funds OppenheimerFunds and Franklin Advisers.

The federally appointed Oversight Board confirmed receipt of the Fiscal Plans for the Commonwealth, PREPA and also for PRASA, the aqueduct and sewer authority.

"The Oversight Board views implementing structural reforms and investing in critical infrastructure as key to restoring economic growth and increasing confidence of residents and businesses," said Natalie Jaresko, Executive Director of the Oversight Board in a statement issued Thursday.

The Oversight Board is holding a listening session to receive testimony from experts and stakeholders on the future of Puerto Rico's energy sector next Thursday in New York. The Board also intends to proceed with its evaluation of the three fiscal plans and hopes to certify them by February 23rd.

https://www.cnbc.com/2018/01/25/pue...bt-service-payments-for-the-next-5-years.html
 
Just give up and spread the people around the United States.

They don't know what they are doing
 
Just incompetent ass clowns. What a joke and waste of dollars. Fuck the cesspool they've created.
 
How does an Island of less than 3 million people rack up so much debt?

They have a 45% poverty rate and a per capita debt of 12k

I believe all of the reasons have been mentioned in this discussion.

They kicked that can down the road for as long as they possibly could, until they reached the cliff.
 
How does an Island of less than 3 million people rack up so much debt?

They have a 45% poverty rate and a per capita debt of 12k

https://www.bloomberg.com/view/arti...co-s-economic-disaster-was-made-in-washington

Basically their whole economy revolved around a tax exemption status, when that was taken from them, its economy went through the crapper, the whole territorial status and the Jones Act makes Puerto Rico completely non-competitive.

Most sovereign debt is planned around endless economic growth and Puerto Rico experienced big recessions after it, the young simply left the island exacerbating its economic woes.
 
https://www.bloomberg.com/view/arti...co-s-economic-disaster-was-made-in-washington

Basically their whole economy revolved around a tax exemption status, when that was taken from them, its economy went through the crapper, the whole territorial status and the Jones Act makes Puerto Rico completely non-competitive.

Most sovereign debt is planned around endless economic growth and Puerto Rico experienced big recessions after it, the young simply left the island exacerbating its economic woes.
That and their government is severely corrupt
 
Here is an interesting little nugget:

PR's total debt is $123 Billion. Their GDP in 2017 was roughly $103 Billion. Debt was 116% of GDP

The US is currently at 108%. PR is at 116%, and they are going bankrupt.

PR cant print US dollars like the Federal government can.

Also the US economy is growing while PR one is shrinking.
 
All the Puerto Ricans in Newark will start sending more money back to their home island.
 
PR cant print US dollars like the Federal government can.

Also the US economy is growing while PR one is shrinking.

True. I just found it interesting.
 
Just give up and spread the people around the United States.

They don't know what they are doing

Agreed. PR is little more than a land mass to slow down hurricanes heading for Florida at this point.
 
Puerto Rico board finalizes deal securing bond insurers' support for debt plan
By Maria Chutchian | July 27, 2021

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(Reuters) - The federally appointed financial oversight board tasked with guiding Puerto Rico’s debt restructuring has finalized a deal with two key creditors, adding to growing support for the proposed plan to fix the commonwealth’s debt crisis.

The oversight board, represented by Proskauer Rose, announced its pact with bond insurers Ambac Financial Group and Financial Guaranty Insurance Company in a statement on Tuesday. The settlement resolves the bond insurers’ litigation over rights to certain revenues and sets aside $260 million for holders of debt issued by the Puerto Rico Infrastructure Financing Authority (PRIFA).

Puerto Rico filed for its bankruptcy-like court proceeding, known as a Title III case, in May 2017 to address its approximately $120 billion in public debt and pension liabilities. In recent months, the board has struck deals with a variety of powerful creditor groups that should help it conclude the Title III proceedings by the end of the year.

Under the proposed debt adjustment plan, Puerto Rico’s $35 billion in public debt would be reduced to $7.4 billion and more than $50 billion in pension liabilities would be restructured. The proposal has support from several groups of bondholders and other creditors but still faces opposition from the Puerto Rican government, as well as some retail investors and individual citizens.

Ambac, represented by Milbank, and FGIC, represented by Butler Snow, insure hundreds of millions of dollars in PRIFA bonds, which the authority stopped paying in 2015. Under the agreement announced Tuesday, PRIFA bondholders will collect $260 million in cash – a 90% discount to PRIFA claims, according to the board’s statement. Of that amount, Ambac will receive $34.75 million and FGIC will receive $21.75 million, according to court papers.

At the request of the board, U.S. District Judge Laura Taylor Swain, who sits on both the Manhattan and San Juan federal courts, postponed the continuation of a July 13 hearing that was scheduled to occur on Tuesday on soliciting creditor votes. The hearing is now set for Thursday.

At the July 13 hearing, a lawyer for the board had told Swain that it had reached a tentative deal with Ambac and FGIC. Tuesday’s statement confirms the settlement. The judge overruled some objections to the proposed solicitation at that hearing but said she would wait to issue a final ruling until the Ambac and FGIC agreement was finalized.

Despite the increasing support from creditors for the oversight board’s debt restructuring, Puerto Rico’s government remains opposed to proposed pension cuts tied to the plan. The board sued the government in early July to block legislation that it says would reintroduce expensive pension obligations that the plan is specifically trying to address.

https://www.reuters.com/legal/trans...g-bond-insurers-support-debt-plan-2021-07-27/
 
Federal judge signs a deal to allow Puerto Rico to start emerging from bankruptcy
AP | January 19, 2022

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SAN JUAN, Puerto Rico — Puerto Rico's nearly five-year bankruptcy battle is ending after a federal judge on Tuesday signed a plan that slashes the U.S. territory's public debt load as part of a restructuring and allows the government to start repaying creditors.

The plan marks the largest municipal debt restructuring in U.S. history and was approved following grueling bargaining efforts, heated hearings and multiple delays as the island struggles to recover from deadly hurricanes, earthquakes and a pandemic that deepened its economic crisis.

"There has never been a public restructuring like this anywhere in America or in the world," said David Skeel, chairman of a federal control board appointed to oversee Puerto Rico's finances that has worked with the judge on the plan.

He noted that no bankruptcy mechanisms exist for countries or U.S. states like the one Puerto Rico was granted.

"This was an astonishingly complex and large and important bankruptcy," Skeel said, noting that the island had three times as much debt as Detroit.

Puerto Rico's government declared in 2015 that it could not afford to pay its more than $70 billion public debt load it had accumulated through decades of mismanagement, corruption and excessive borrowing. It also had more than $50 billion in public pension liabilities. In 2017, it filed for the largest municipal bankruptcy in U.S. history, a year after U.S. congress created the financial oversight and management board for Puerto Rico.

The plan that restructures the central government's debt goes into effect March 15 and could be appealed, although Skeel expected the judge to affirm it.

The board said that the plan signed by federal judge Laura Taylor Swain cuts Puerto Rico's public debt by 80% and saves the island more than $50 billion in debt service payments as some creditors agreed to deep cuts. Board members noted the plan reduces claims against the government from $33 billion to just over $7.4 billion, with 7 cents of every taxpayer dollar going to debt service, compared with the previous 25 cents.

"This period of financial crisis is coming to an end," said Natalie Jaresko, the board's executive director. "We have accomplished what many thought impossible."

The plan also avoids proposed pension cuts that had led to heated debates and created a rift between the board and Puerto Rico's legislature and the island's governor, which vehemently opposed them.

The plan notes that Puerto Rico has sufficient resources to pay the debt through 2034, but critics have said the government does not have the finances required to meet debt service payments and warned of more austerity measures.

Jaresko brushed away those concerns, saying that while budgets were cut, there were no layoffs or agencies shut down.

"It wasn't austerity," she said. "People look at the last five years and think it's going to continue like that forever, but it doesn't."

Still pending is the debt restructuring of some government agencies, including that of the Puerto Rico Highways and Transportation Authority and the Puerto Rico Electric Power Authority, which holds the largest debt.

"This one is very important for the economy of Puerto Rico because if it means a rise in energy costs, it makes us less competitive," said José Caraballo, a Puerto Rico economist and professor.

He added that the island likely would be able to access the market in three to five years to issue bonds for capital projects but warned it should avoid repeating past mistakes.

"Borrowing is playing with fire," he said. "You need to have people who know what they're doing. Otherwise, one can return to this disaster we call a debt crisis."

Gov. Pedro Pierluisi said that while the plan approved Tuesday is not perfect, it represents a big step for the island's economic recovery.

"We still have a lot of work ahead of us," he said.

José Luis Dalmau, president of Puerto Rico's senate and a member of the main opposition party, also praised the plan and called it a transcendental step for the island's economic recovery.

"From this moment on, a new page of fiscal responsibility, good governance and unity begins, which will lead to a more prosperous economy, a climate of job creation and greater fiscal stability," he said.

Jaresko noted the plan has guardrails to prevent a repeat of the island's debt crisis, including allowing long-term borrowing only for capital improvement projects. The board, known as "la junta" in Puerto Rico and reviled by many, expects to be around for at least three more years, or until Puerto Rico has four consecutive balanced budgets, Skeel said.

"We will not stay a day longer than our mandate," Jaresko said. "It is our goal to finish what we were instructed to do by Congress."

https://www.npr.org/2022/01/19/1074034082/puerto-rico-judge-bankruptcy-debt-deal
 
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