PR gov’t defaults on $312M in debt, interest due Feb. 1

Written by  //  February 2, 2017  //  Government  //  No comments

The Government Development Bank was among several credit-issuing entities that defaulted on Feb. 1 payments. (Credit: © Mauricio Pascual)

The Commonwealth of Puerto Rico defaulted on $312 million in principal and interest due Feb. 1st by four credit-issuing entities, including constitutionally protected General Obligation bonds, the government confirmed Wednesday.

“This government inherited a dire financial situation, marked by several years of indifference towards our fiscal health and the impact it has on the people of Puerto Rico,” the administration said in a statement.

On the list of defaults is: the Government Development Bank, which will miss $279.2 million in principal and interest due; $1.3 million in General Obligations interest due; $21.5 million in interest due from the Puerto Rico Public Finance Corporation; and $10.1 million in principal and interest due from the Puerto Rico Infrastructure Financing Authority.

However, the government made payments on the debt of several issuers, including full payments by: the Puerto Rico Sales Tax Financing Corporation (COFINA,) which owed $264.3 million; the Puerto Rico Industrial Development Company (PRIDCO,) which owed $600,000 in interest; the Puerto Rico Aqueduct and Sewer Authority (PRASA,) which owed $2.5 million in interest; the Municipal Finance Authority (MFA,) which owed $13.4 million in interest; the Employee Retirement System (ERS,) which owed $13.9 million; and, the Puerto Rico Highways and Transportation Authority (HTA,) which owed $2 million in interest due.

The government said Wednesday it is currently crafting a comprehensive Fiscal Plan that meets the standards set forth in the Puerto Rico Oversight, Management, and Economic Stability Act and the certification requirements of the Fiscal Oversight and Management Board.

The Fiscal Plan will ultimately set the course for a sound fiscal turnaround driven by cost savings and economic development measures to spur sustainable growth.

“As part of these efforts, the government has already implemented near term initiatives that are expected to generate over $118 million in annual savings,” Gov. Ricardo Rosselló’s administration said.

“These measures, together with long term structural reforms, will allow the government to address its debt obligations while ensuring the provision of essential services to the people of Puerto Rico,” the statement added.

“In this historical moment, it is vital that our focus remain on achieving a comprehensive solution to the fiscal problem faced by the government of Puerto Rico,” the government further added.

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