The 60 Plus Association announced Thursday the formation of “Main Street Bondholders,” a new small bondholder coalition made up of ordinary investors from Puerto Rico and the U.S. mainland who hold retirement, college and life savings in Puerto Rican bonds.
The group claims Gov. Alejandro García-Padilla’s “recent statements that he would refuse to honor Puerto Rico’s debts” threaten their investments. In June, García-Padilla said the government’s $72 billion public debt is not payable, urging creditors to negotiate.
“Gov. García-Padilla’s recent statements that his government would refuse to honor its debts, including Puerto Rico’s own constitutional debt, are reckless, and are a serious threat to thousands of our members who hold investments in Puerto Rico bonds,” said Matthew Kandrach, vice president of the 60 Plus Association.
“Puerto Rico can fix its problems, but fixing Puerto Rico needs to start with fiscal reform, not punishing creditors. The governor and his circle of advisors, who are the same bunch representing deadbeat sovereigns like Argentina, have chosen to manufacture a crisis to get Washington’s help in their plan to stiff creditors,” said Kandrach
Saying Congress must not allow that to happen, the Coalition representative said Puerto Rico would benefit from a fiscal control board, just like the District of Columbia had in the 1990s when it faced financial crisis.
“Congress must also oppose the governor’s plan to restructure Puerto Rico’s constitutional bonds. Allowing him to do so would set a terrible precedent, and open a Pandora’s box of other state defaults. No retirement account in America would be safe,” he said.
During a media call Thursday to launch the coalition, the group enlisted Elías Gutiérrez, a small bondholder and economics professor to rally for bondholder rights.
“I invested my family’s life savings in Puerto Rican bonds because I wanted to support Puerto Rico and believed the government would never abandon its obligations,” Gutiérrez said. “Bondholder’s rights must be protected. Our word and our laws must be valued above all else.”
He said the Commonwealth must honor its debts, especially constitutionally protected debt in the form of General Obligations bonds.
“We will have no credibility if we repudiate on our promises. Gov. García-Padilla must seek to restore confidence and credibility in capital markets, which can only be done by joining those in his party that are rejecting the current strategy of his consultants and legal team, or our economy and the people of Puerto Rico will continue to suffer,” Gutiérrez said.
The 60 Plus Association has a history of uniting and providing a platform for small bondholders. In 2009, 60 Plus launched the GM Main Street Bondholders Coalition that was dedicated to call attention to small bondholders who were not given a voice throughout the General Motors bankruptcy negotiation process.