According to The New York Times, Puerto Rico is again delaying a recent proposed bond issuance latest decision to stall the bond sale, this time because of trouble in the global markets. However, said the newspaper, the island’s government also seems to have come to the conclusion it could not borrow the $750 million by issuing the bonds at an interest rate that was affordable.
The delay in the Puerto Rico bond sale comes just two months after Gov. Alejandro Garcia Padilla declared the territory’s debts unpayable. Not only are the territory’s three big public utilities unable to pay off their debt but also they cannot shut down their operations. Earlier this month, the island defaulted on the bulk of a bond payment due on debt belonging to the Public Finance Corporation, which is another one of Puerto Rico’s government agencies.
On Tuesday, Puerto Rico asked the U.S. Supreme Court grant it the use of bankruptcy protection as the Commonwealth attempts to restructure $20 billion in public utility debt. Garcia Padilla and Secretary of Justice Cesar Miranda Rodriguez submitted a petition requesting that the court overturn previous rulings striking down the 2014 Puerto Rico Public Corporation Debt Enforcement and Recovery Act.
The Act granted Puerto Rican utilities and public companies bankruptcy protection not included under U.S. Chapter 9 bankruptcy laws. Meaning, while the territory awaits that decision, the September 1 deadline for Puerto Rico to outline its restructuring plan is just days ahead.
“The result of all this”, according to Shepherd, Smith, Edwards & Kantas partner Kirk Smith, “is that it appears bleak for investors in Puerto Rico debt, whether investors bought individual bonds or funds composed of Puerto Rico bonds.”
At Shepherd Smith Edwards and Kantas, our Puerto Rico bond fraud lawyers represent investors that have sustained losses from investing in Puerto Rico closed-end funds and bond funds sold by UBS Puerto Rico (UBS), Banco Popular, Banco Santander (SAN), and other brokerage firms. Many investors lost money because these funds were recommended to them even if they were unsuitable for their portfolios and not in line with their investment goals.
Some brokers even recommended that investors borrow money in order to purchase even more closed-end funds and municipal bond funds. Our Puerto Rico municipal bond fraud lawyers have spent the last two years working with investors to recoup their losses. Please contact our securities fraud law firm today to request your free case consultation. We represent clients in Puerto Rico and the U.S. mainland.
Puerto Rico Delays Bond Sale, The Wall Street Journal, August 25, 2015