Puerto Rico Commission Says Bonds May Violate Constitution
- Island debt service may exceed limit, preliminary finding says
- Report urges island commission to complete debt audit
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Puerto Rico may have sold bonds that violated the commonwealth’s constitution, according to preliminary findings from an island commission charged with auditing its $70 billion of municipal debt.
The report analyzes the commonwealth’s last general-obligation bond sale, a $3.5 billion offering in March 2014, purchased mostly by hedge funds, and a 2015 short-term note issue. The island’s constitution restricts annual debt-service on direct obligations and bond maturities, limitations that the 2014 bond sale may have broken, according to the report.