Puerto Rico Defaults on More Debt Payments

The Puerto Rico government has defaulted on more debt payments that were due to bondholders. The U.S. Territory did not meet the February 1, 2017 due date on $312 million in principal plus interest. The default includes Puerto Rico General Obligation bonds that are supposed to be constitutionally protected.

The Puerto Rican Government Development Bank owes $279 million of the defaulted debt. A spokesperson for Puerto Rico’s Aqueduct and Sewer Authority, however, said that the Commonwealth paid $295 million of interest, which was due on some of the debt.

Puerto Rico owes $70 billion of debt and the island has been embroiled in financial troubles for over three years. The territory has struggled to pay back the debt it owes, defaulting more than once on payments that were due. Last weekend, Puerto Rico’s federal oversight board voted to extend the stay placed on litigation against the island for debt payments that have been missed. The stay was supposed to lift on February 15, 2017. Now that date is May 1, 2017.

The island’s new governor, Ricardo Rosselló, was also granted an extension for when he has to turn in a fiscal blueprint, mapping out how Puerto Rico plans to restore its fiscal health. He now has until February 28, 2017.

Governor Rosselló recently took back control of bond restructuring negotiations involving PREPA, Puerto Rico’s public electric utility company. He placed the Fiscal Agency and Financial Advisory Authority in charge of those talks. PREPA’s board had been about to reach a settlement with bond investors.

Unfortunately, many investors sustained losses when they were irresponsibly encouraged by firms such as UBS (UBS), Santander Securities (SAN) (a division of Banco Santander), Popular Securities (a division of Banco Popular), and Merrill Lynch to invest in Puerto Rico bonds and Puerto Rico closed-end bond funds. These investors were not equipped to handle the risks, which were downplayed to many of them.

Throughout this time, our Puerto Rico bond fraud lawyers have been working with investors to try and recoup losses incurred investing in the territory’s municipal bonds and closed-end mutual funds that were also heavily invested in Puerto Rico bonds. When the securities plunged in value in 2013, many investors lost everything.

If you sustained investment losses from investing in Puerto Rico securities and your broker worked for UBS Financial Services of Puerto Rico, Santander Securities , Popular Securities , Morgan Stanley (MS), Merrill Lynch, or another brokerage firm, contact Shepherd, Smith, Edwards and Kantas, LLP today.

Puerto Rico says it will miss some Feb. 1 debt payments, Reuters, February 1, 2017

Puerto Rico Board Extends Lawsuit Stay, Plan Deadline, The Bond Buyer