Gov. Alejandro Garcia Padilla late Thursday invoked Puerto Rico's Moratorium Act on the payment of general obligation bonds and obligations of other public entities, opening the door to making partial payments on about $2 billion of debt due Friday.
He also declared a state of emergency at the Puerto Rico Convention Center District Authority, the Employees Retirement System, the Industrial Development Company, and the University of Puerto Rico, to ensure these entities protection from litigation. The governor said this protection comes from the Moratorium, Financial Emergency and Rehabilitation Law, which passed in April, and is used by the central government to retain funds necessary for its operation.
All of these entities owe debt on Friday.
By invoking the moratorium for these agencies and types of debt, the governor opens the door to skipping payment their bonds.
In a press release the governor announced the "suspension of payment" on Puerto Rico's GO debt. A Puerto Rico official indicated that the governor wasn't saying that Puerto Rico wouldn't pay any GO debt Friday, but was opening the door to a partial payment. The governor has said repeatedly that Puerto Rico did not have the money for full payments of Friday's debt.
The announcement came after President Obama signed legislation to help the territory restructure its debt, imposing a stay on litigation over payment. Puerto Rico has about $69 billion of public debt outstanding.
On Monday, the EFE news agency quoted Puerto Rico Chief Financial Officer Melba Acosta Febo as saying that the commonwealth would try to pay interest due on its debt Friday, particularly that on the general obligation bonds, and that all interest due totaled more than $300 million.
