`Question Everything': Puerto Rico Hits $3.8 Trillion Market
- Bankruptcy case casts doubt on bonds backed by revenue pledges
- Judge approves deal that shifts sales-tax money to government
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America’s local governments frequently pledge a slice of their revenue to investors to make their bond deals more attractive by adding an extra layer of security. But Puerto Rico’s record-setting bankruptcy has cast that safety in doubt.
That’s because bondholders who were promised a dedicated share of the island’s sales-tax revenue have seen that rolled back in court, where creditors since 2017 have been squaring off over who has the highest claim to the distressed government’s cash.