After failing to make a scheduled bond payment on May 2, Puerto Rico is rapidly heading toward a broader default. On July 1, a $2 billion bond payment comes due, and the island will not be able to pay.Last Wednesday, congressional leaders unveiled a new bill, crafted with help from the Obama administration, that would create an orderly process for restructuring the territory’s debts and measures to ensure financial discipline going forward — including the creation of a control board to oversee its public finances.As the crisis has deepened, a group of Puerto Rico’s creditors, made up mainly of hedge fund managers who bought Puerto Rico’s debt at deep discounts, has been spending millions of dollars to thwart this initiative, including running TV ads that falsely claim this approach is a “bailout.”This plays into the way the Puerto Rican debt crisis has been framed all along: as a battle between creditors and the government, with the creditors calling for “fairness” and making sure the island meets as much of its bond obligations as possible.But if you’re really worried about creditors, there’s a good reason to pass the bill currently before Congress.
Comment on The Puerto Rico bill is good for the bondholders
Simon Johnson, Politico
Tue, 05/24/2016 - 2:25am
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