On April 11, 2016, Puerto Rico announced its latest debt restructuring proposal. The U.S. Territory faces $70 Billion in total debt, a 45% poverty rate, and a shrinking population, all of which threaten to collapse its economy. The government already stated that it cannot afford to pay the $422 million due on May 1, 2016.
The most recent plan would reduce a $49 Billion dollar portion of its debt by $12 to $17 billion by exchanging existing debt for two classes of new bonds—a base bond and a capital appreciation bond.
Stateside, the U.S. congress is expected to unveil a new bill that would put Puerto Rico’s finances under federal oversight and likely provide a legal debt restructuring mechanism. The bill is expected to be unveiled this week.
Juan C. Obregon