The Puerto Rico Restructuring Agreement refers to the legal framework that governs the process of managing Puerto Rico's public debt and tackling its financial crisis. It outlines the terms and conditions under which the territory negotiates with its creditors to restructure its outstanding debt obligations. This agreement is crucial for Puerto Rico as it seeks to alleviate its economic burden and stabilize its finances. By renegotiating its debt, the territory aims to improve its creditworthiness and regain financial sustainability. There are different types of Puerto Rico Restructuring Agreements, including: 1. Title III Proceedings under PROM ESA: The Puerto Rico Oversight, Management, and Economic Stability Act (PROM ESA) is a federal law that enabled Puerto Rico to restructure its debt. Title III of PROM ESA establishes a court-supervised debt restructuring process, where the territory can modify the terms of its debt with the oversight of a federal oversight board. 2. Voluntary Agreements: This category encompasses negotiated agreements between Puerto Rico and its creditors. It involves discussions and negotiations to reach a consensus on debt repayment terms, such as extending maturities, lowering interest rates, reducing the principal amount, or exchanging existing bonds for new ones. 3. Restructuring through the Oversight Board: The Financial Oversight and Management Board for Puerto Rico, established by PROM ESA, actively participates in the restructuring process. They provide oversight and guidance, ensuring that any debt restructuring plans are in line with the overall fiscal goals and objectives of Puerto Rico. 4. Debt Exchanges: Debt exchanges or bond exchanges involve offering existing bondholders the option to exchange their current debt securities for new ones with modified terms. This may include offering longer repayment periods, lower interest rates, or even a reduction in the principal amount owed. Throughout these restructuring processes, Puerto Rico aims to find a balance between meeting its debt obligations and promoting economic growth. The objective is to create a sustainable path forward that allows the territory to regain financial stability and provide essential services to its residents, while also satisfying its creditors within its fiscal limitations.
Puerto Rico Restructuring Agreement
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More than eight years after the Puerto Rico Electric Power Authority stopped paying its bonds and with most other Puerto Rico municipal issuers having since restructured their bonds, eight Puerto Rico bonds continue to pay in full and on time.
The debate over Puerto Rico's statehood remains as relevant as ever, as the island struggles with the combined effects of economic depression, shrinking population, debt crisis and bankruptcy, natural disasters, the COVID-19 pandemic, and government mismanagement.
The Puerto Rico Sales Tax Revenue Bonds (commonly known as COFINA bonds) are government bonds issued by the Urgent Interest Fund Corporation (COFINA) to pay the extraconstitutional public debt of Puerto Rico.
On January 18, 2022, Judge Laura Taylor Swain of the U.S. District Court for the District of Puerto Rico confirmed the Plan of Adjustment for the Commonwealth of Puerto Rico to restructure $33 billion of liabilities against the Commonwealth of Puerto Rico, the Public Building Authority (PBA), and the Employee ...
The debt restructuring plan was approved by a federal judge in January. It reduces claims against Puerto Rico's government from $33 billion to just over $7.4 billion, with 7 cents of every taxpayer dollar going to debt service, compared with 25 cents previously.
All bonds issued by the Government of Puerto Rico, or by its authority, shall be exempt from taxation by the Government of the United States, or by the Government of Puerto Rico or of any political or municipal subdivision thereof, or by any State, Territory, or possession, or by any county, municipality, or other ...
Over the past few decades, declining tax revenues and mounting debt in other areas have forced Puerto Rico to borrow money to keep its Medicaid program solvent. Another serious problem stems from Puerto Rico's underfunded social safety net.
The Puerto Rican government-debt crisis was a financial crisis affecting the government of Puerto Rico. The crisis began in 2014 when three major credit agencies downgraded several bond issues by Puerto Rico to "junk status" after the government was unable to demonstrate that it could pay its debt.