Puerto Rico Bondholders Deny Legitimacy of Each Other's Debt
- Investors call their rival’s government notes unconstitutional
- Squabble over $16 million could be proxy for who goes unpaid
How Did Puerto Rico Go Bankrupt?
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A relatively paltry $16 million has ignited a skirmish among bondholders over who will get paid first and who gets stiffed in Puerto Rico’s $74 billion bankruptcy.
The dispute revolves around interest that’s due June 1 to holders of sales-tax bonds known as Cofinas. Mathematically, the $16 million is barely a rounding error. About $400 million collected from sales taxes is being held in trust -- enough to cover next week’s payment more than 20 times over.