- Due date pushed back to on or before Sept. 8 from Aug. 30
- Electric utility debt restructuring plan due on Sept. 1
Puerto Rico said Governor Alejandro Garcia Padilla granted an extension for when advisers are scheduled to deliver a proposal to restructure the commonwealth’s $72 billion debt burden to Sept. 8 because government officials were focused in the past week on the possible impact of tropical storm Erika.
The plan had been scheduled to be sent to Garcia Padilla on Aug. 30. The work of the designated group, the consultant’s analysis, and the final drafting of the document have not been completed, Víctor Suárez Meléndez, the governor’s chief of staff, said in a statement Saturday.
A Puerto Rico restructuring would be the largest ever in the $3.6 trillion municipal-bond market. After a history of borrowing to push out debt payments and fill budget gaps, the commonwealth is seeking to break the cycle with investors declining to lend more money. The governor said in June that the island could no longer afford to make its debt payments.
The commonwealth and its main electric utility have spent more than $60 million in legal and advisory fees from firms such as Cleary Gottlieb Steen & Hamilton LLP and Millstein & Co. over the past two years as the governor and public finance officials seek to restructure the debt, according to a review of contracts by Bloomberg News.
Puerto Rico’s anticipated restructuring follows similar debt crises on the mainland. Detroit’s bankruptcy, a 17-month process, cost $177.9 million on $8 billion of bonded debt. Unlike Detroit, Puerto Rico localities cannot file for Chapter 9 bankruptcy protection, leaving the island without a clear legal framework to resolve its debt crisis.