AMBAC, FGIC Demand Puerto Rico Transfer Taxes to Bondholders
- Push to claw back funds violates local and U.S. law, they say
- Firms guaranteee $900 million of debt by island authority
Will Puerto Rico Pay Up by Jan. 1?
This article is for subscribers only.
Two companies that guarantee almost $900 million of debt issued by a Puerto Rico government authority and backed by federal taxes on rum demanded the commonwealth return as much $94 million of revenue it diverted from bondholders to pay other creditors.
Ambac Assurance Corp., a unit of Ambac Financial Group Inc., and Financial Guaranty Insurance Co. made their case in a letter to Puerto Rico Governor Alejandro Garcia Padilla. They said that the plan to divert rum-tax revenue pledged to $1.9 billion of bonds issued by the Puerto Rico Infrastructure Financing Authority violated the commonwealth’s constitution as well as the takings, contracts and due process clauses of the U.S. Constitution.