Puerto Rico's government, after fanning concerns that it won't be able to make bond payments due in December, said it plans to pay Christmas bonuses this year.
On Tuesday a Treasury spokeswoman confirmed an account on the El Vocero news web site quoting Puerto Rico Treasury Secretary Juan Zaragoza G-mez as saying the bonus would be paid. The bonus will be delayed to December because of Puerto Rico's tight financial straits, he said.
Some bondholders are concerned whether Puerto Rico will make bond payments due on Dec. 1 and Jan. 1. The Government Development Bank for Puerto Rico owes $354 million in debt on Dec. 1. According to Moody's Investors Service, $273 million of this sum has a constitutional guarantee and $81 million does not. Puerto Rico also owes $330 million in general obligation debt on Jan. 1.
Puerto Rico's government says its liquidity is very low and is expected to remain that way for the next several weeks. Its leaders have raised possibilities including a partial shutdown of the government, skipping the Christmas bonuses, and not making the December or January bond payments.
This year's approved budget allocated $120 million to Puerto Rico's Christmas bonus, according to the TelemundoPR web site. The government normally provides the Christmas bonus every year.
On Nov. 10 Puerto Rico Gov. Alejandro García Padilla said he was seeking to negotiate with the bondholders but that, "If you don't negotiate and I am obligated to choose between the creditors and the Puerto Rican people, I'm going to pay the Puerto Ricans."
Puerto Rico's government met with representatives of some of its bondholders on Friday in New York City. According to published accounts at least some of the bondholders were open to Puerto Rico's proposed "superbond" to replace existing bonds.
