Puerto Rico Gov. Alejandro García Padilla repudiated a bill to guide possible future restructurings of Puerto Rico public corporation finances, saying the proposal ran counter to the administration's efforts to rebuild the economy.
Puerto Rico Senators Angel Rosa Rodríguez and José Nadal Power introduced Senate Bill 993 on Thursday, two days after Puerto Rico's sale of $3.5 billion in general obligation bonds. The bill would establish a law to govern the restructuring of public corporations, provide for a restructuring process to be followed in the case of the fiscal insolvency of a public corporation, and to define when a restructuring would be applicable.
"We have deep concerns regarding the implications of Senate Bill 993 that would allow the restructuring of public corporations as introduced by Senators Angel Rosa and José Nadal Power," said Ingrid Vila, García Padilla's chief of staff. "It is contrary to our efforts to rescue our economy, create jobs, balance our budget and turn public corporations self-sufficient. We do not endorse this bill."
Puerto Rico's bond yields surged over the summer and fall of 2013 as Detroit's bankruptcy filing exacerbated concerns that the commonwealth's high debt level, weak economy, and persistent deficit financing would lead to a restructuring. While these concerns have receded since the start of the year, some investors remained wary as Puerto Rico was downgraded to non-investment grade by the three biggest rating agencies ahead of its successful debt sale.
In a press release, the Government Development Bank and Treasury said they neither "proposed, reviewed, authorized or were in any way involved in the drafting or formulation of this legislation," adding: "The commonwealth remains focused on its plan of creating jobs, balancing the budget and making public corporations self-sufficient . The GDB, as fiscal agent to the commonwealth and its instrumentalities, is evaluating the financial condition of the public corporations to assist in formulating plans to ensure public corporations become self-sufficient. No specific contingency plan, including a debt restructuring, has been adopted in the event the financial condition of the commonwealth's public corporations does not improve."
Both Nadal Power and Rosa Rodríguez are members of the Popular Democratic Party with the governor. The party holds a majority in both houses of the Puerto Rico legislature.
In other Puerto Rico news, the Unites States Bureau of Labor Statistics announced that the preliminary estimate of Puerto Rico's seasonally adjusted unemployment showed it slid to 15.2% in January from 15.5% in December. The unemployment rate had increased every month since May 2013.
In January seasonal-adjusted employment was down 2,725 or 0.27%. Unemployment was down 4,007 or 2.17%.
