Puerto Rico in Distress

ABI Analysis

Puerto Rico has scheduled meetings Friday with representatives of several bondholder groups to discuss a possible restructuring of $70 billion of municipal bonds, the Wall Street Journal reported today. The meetings come as Puerto Rico struggles to make progress on two tracks, striking deals with bondholders and persuading U.S. legislators that the island merits relief from the U.S.

A U.S. federal judge said yesterday that a second lawsuit over Puerto Rico's debt default will be joined with a similar suit in order to save time and money and avoid inconsistent rulings, Reuters reported. Financial Guaranty Insurance Co., or FGIC, sued Puerto Rico on Tuesday for diverting $164 million in revenue streams meant to pay the island's debt.

On his first official visit to the Puerto Rico, Treasury Secretary Jacob J. Lew said the financial crisis on the island was deepening and he urged Congress to act quickly to give the government the power it needs to restructure all of its debt, the New York Times reported today. “The people of Puerto Rico are sacrificing,” Lew said.

Four months after announcing a grueling five-year plan for reducing the island’s vast debt and reviving economic growth, Puerto Rico’s top economic officials said yesterday that they had been too optimistic and revised the plan for the worse, the New York Times reported today.