On August 1, the U.S. Commonwealth of Puerto Rico and its agencies will owe roughly $346 million in bond payments. This latest deadline comes one month after the U.S. Territory defaulted on nearly $1 billion of bond payments that were due on July 1. According to Bloomberg, here is what is due:
· The Puerto Rico Sales Tax Financing Corp. (often called “COFINAs”) owes about $256 million of principal plus interest in COFINAs. S & P Global Ratings has said that the bond trustee has the money to pay the debt that is due next week. COFINAs are paid back from the Commonwealths’ sales tax. This local agency has $15.2 billion of outstanding debt.
· Every month, the territory owes $13.9M of interest, which Puerto Rico has not defaulted on yet.
· The Government Development Bank for Puerto Rico (often called the “GDB”), which is not allowed to make withdrawals unless they are for essential services, owes $28.5 million in interest. In total, the GDB owes $5.1 billion of debt.
· The Commonwealth owes $1.3 million of interest on general obligation bonds.
· The Puerto Rico Highways & Transportation Authority owes $600,000 of interest. The authority paid nearly all of the interest and principal that was due on July 1 using reserve funds.
· The Puerto Rico Aqueduct and Sewer Authority (known as “PRASA”) owes $2.5 million of interest . Earlier this month, Puerto Rico paid investors $135 million while working out a deal to delay $12.7 million Puerto Rico owes on PRASA bonds that are supposed to be guaranteed by the island.
· The Puerto Rico Infrastructure Financing Authority owes $700,000 of interest. The authority defaulted on the interest payment that it owed in January and the $77.1 million that was due July 1.
Currently, Puerto Rico and its various authorities owe more than $70 billion in debt, which the island has struggled to pay. A federal control board to be set up soon will supervise debt restructuring.
For the past three years, our Puerto Rico bond fraud lawyers have been working with investors to recoup the losses they sustained from investing in the island’s municipal bonds or in bond funds that invested in Puerto Rico. Many investors were inappropriately advised by brokerage firms such as Banco Popular, Banco Santander, and UBS-Puerto Rico to invest in Puerto Rico bonds and closed-end bond funds even though these customers could not afford the high risks.
In some instances, investors were encouraged to borrow money to invest more. Contact Shepherd Smith Edwards and Kantas today for a free, no obligation confidential consultation.
More Defaults Likely to Come: What Puerto Rico Owes on Aug. 1, Bloomberg, July 29, 2016
Hedge Funds Sue Puerto Rico and Its Governor, Stockbroker Fraud Blog, July 25, 2016
Ameriprise Financial Advises Clients to Sell OppenheimerFunds Muni Bond Funds with Puerto Rico Debt, Stockbroker Fraud Blog, July 20, 2016