Puerto Rico Agency Fails to Make September Interest Payment

  • Public Finance Corp. misses $4 million payment to bondholders
  • Interest payment skipped as recovery plan expected next week

Puerto Rico’s Public Finance Corp., which in August became the commonwealth’s first debt issuer to default on its obligations, failed to pay bondholders an additional $4 million of interest due Sept. 1.

The missed payment was noted Friday in an electronic filing to the Municipal Securities Rulemaking Board’s website, called EMMA. The agency, which owes about $1 billion of debt repaid through legislative appropriation, owed investors $4 million of interest this month, according to data compiled by Bloomberg.

“It’s consistent with the earlier missed payment,” said Joseph Rosenblum, director of municipal credit in New York at AllianceBernstein Holding, which manages $32 billion of municipal bonds, including Puerto Rico securities. “It’s appropriation debt, which carries the weakest security.”

The second missed PFC payment comes as Governor Alejandro Garcia Padilla is set to receive from advisers Tuesday what’s being called an economic recovery and debt-adjustment plan. The governor in June said Puerto Rico and its agencies were unable to repay all of its $72 billion of debt on time and in full and said the commonwealth would seek to delay payments.

The PFC on Aug. 3 failed to make a $58 million principal and interest payment after the legislature didn’t appropriate the funds, citing a budget crunch. A PFC bond maturing August 2031 last traded Aug. 6 at 8 cents on the dollar, down from 51.4 cents at the start of the year, Bloomberg data show.

“At this time, the trustee has not been directed to take any action under the trust agreement,” the filing said.

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