Puerto Rico in Distress

ABI Analysis

Puerto Rico’s governor announced yesterday that a federal control board reached a key deal that would reduce the U.S. territory’s overall debt by nearly 80%, but that his administration is rejecting it amid concerns about cuts to the island’s crumbling public pension system, the Associated Press reported.

Puerto Rico moved closer to resolving the largest municipal-debt default in U.S. history after creditors owed roughly $11.7 billion backed a settlement framework, the most Wall Street support yet amassed for a restructuring of the territory’s core public debts, the Wall Street Journal reported.

Puerto Rico’s financial oversight board reached a tentative agreement with investors on how to reduce $18 billion of bond debt and is seeking additional time to file a formal adjustment plan to the court, Bloomberg News reported.

Puerto Rico yesterday presented a budget proposal of $10.7 billion for fiscal year 2022 — about $700 million more than the federally-appointed oversight board is recommending, Bloomberg News reported. Governor Pedro Pierluisi called his spending plan “realistic” and necessary to jump-start the economy of the bankrupt U.S. territory.