Puerto Rico to Meet Investors Monday as Debt Payments Loom

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Puerto Rico Crisis Threatens Bond Insurers

A top Puerto Rico finance official is set to meet on July 13 with bondholders as the commonwealth pushes to restructure its $72 billion of debt.

The meeting with Government Development Bank President Melba Acosta will start at 3 p.m. in Citigroup Inc.’s New York headquarters, said Todd Hagerman, head of investor relations in San Juan for the development bank, which handles the island’s debt transactions.

The gathering will focus on a report released last week by three former International Monetary Fund officials that said Puerto Rico is in a dire position because of high debt, unstable finances and a stagnant economy. Governor Alejandro Garcia Padilla on June 29 said he would seek to delay some debt payments for “a number of years.”

His administration has yet to say which securities would be affected or how such a restructuring would work. Some bonds are protected by the commonwealth’s constitution or backed by revenue such as sales-tax collections. Garcia Padilla said the government would draw up a proposed restructuring plan by the end of August.

“Whatever other information is going to be provided, that will come out on Monday,” Hagerman said in a telephone interview from San Juan.

Orderly Process

Puerto Rico is seeking ways to reduce its obligations. It will ask the U.S. Supreme Court to reinstate a law that would have allowed some commonwealth agencies to negotiate with bondholders to cut what they owe, Cesar Miranda Rodriguez, Puerto Rico’s attorney general, said in a statement Thursday. A U.S. Court of Appeals this week agreed with a San Juan judge who threw out the law in February.

“There is no conceivable reason to deprive Puerto Rico of an instrument that allows an orderly public-debt negotiation,” Miranda Rodriguez said in a statement.

Puerto Rico faces a $93.7 million payment due on July 15 for bonds sold through its Public Finance Corp., according to financial documents posted on the development bank’s website. The bank also has $140 million of debt maturing Aug. 1, data compiled by Bloomberg show.

Hagerman declined to say whether the payments will be made.

“Those decisions will be made on the appropriate dates,” Hagerman said.

Citigroup will lead work on any Puerto Rico transactions to alter its debt, Hagerman said. The report by the IMF officials said Puerto Rico should convince investors to exchange their bonds for new securities with longer maturities and lower payments.

The meeting will be available to watch live on the GDB’s website.

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