FINANCIAL TIMES: A move by Puerto Rico to allow some public companies to restructure their debts has rattled the $4tn US municipal debt market, sparking a credit downgrade by a leading rating agency.
Alejandro Garcia Padilla, the island’s governor, signed a bill at the weekend that allows some of its largest utilities, such as the Puerto Rico Power Authority, to negotiate with bondholders to reduce their mounting debt loads…
Unlike some US municipalities, the constitution of Puerto Rico, a US territory, prevents the government and public companies from seeking protection from creditors in bankruptcy courts. While some public companies could default under the new law, officials were adamant it did not apply to bonds issued and backed directly by the commonwealth, which make up the bulk of the island’s $73bn debt… (more)
