Puerto Rico

The omnibus spending bill for fiscal 2016 fails to contain any significant help for Puerto Rico, but that should come as no surprise as Republicans and Democrats are still divided over the approach that should be taken, said knowledgeable sources.

Lawmakers are considering a $1.15 trillion omnibus spending bill for fiscal year 2016 that does not extend bankruptcy protection to Puerto Rico, and a more than $621 billion tax bill that would make permanent or extend expired tax provisions, including a few that are bond- and Puerto Rico-related.

Assured Guaranty’s chief executive officer is blasting the Treasury Department for pushing for bankruptcy protection for Puerto Rico, claiming the effort is blowing up utility authority negotiations with creditors and bondholders, as well as hurting the territory and alarming the municipal bond market.

Puerto Rico Gov. Alejandro García Padilla said the campaign would be a distraction from his effort to handle the island’s fiscal crisis.

Puerto Rico on Monday cut its revenue projections for the current fiscal year by 5.2%.

Fitch Ratings said it maintained the Rating Watch Negative on the CC rating for the following Commonwealth of Puerto Rico debt: commonwealth of Puerto Rico GO bonds; Puerto Rico Electric Power Authority (PREPA) power revenue bonds; Puerto Rico Aqueduct and Sewer Authority (PRASA) senior lien revenue bonds; Puerto Rico Sales Tax Financing Corporation (COFINA) senior lien sales tax revenue bonds and first subordinate lien sales tax revenue bonds; Employees Retirement System of the Commonwealth of Puerto Rico (ERS) pension funding bonds; Puerto Rico Public Buildings Authority (PBA) government facilities revenue bonds guaranteed by the Commonwealth and rated by Fitch; and PRASA Commonwealth guaranty revenue bonds.

The filing by Republican lawmakers of two bills in the U.S. Congress that could assist Puerto Rico during its current financial crisis does not result in a change to Standard & Poor's Ratings Services' credit rating or outlook (CC/Negative) due what it sees as the uncertain chances for enactment of these bills.

Four of the five Puerto Rico authorities whose revenues were diverted to pay Government Development Bank of Puerto Rico notes on Dec. 1 are expected to make their own bond payments on Jan. 1. The exception may be the Puerto Rico Infrastructure Finance Authority.

The Republican chairs of three Senate committees that have jurisdiction over Puerto Rico and bankruptcy introduced a bill on Wednesday night that would establish an authority that could issue bonds and provide up $3 billion in resources to help Puerto Rico stabilize its budget and debt.

Puerto Rico Gov. Alejandro García Padilla signed a bill to create a fiscal supervisory board Tuesday.

The Puerto Rico Electric Power Authority and its creditors agreed Tuesday to extend deadlines in their Restructuring Support Agreement to Dec. 17.

The passed deadline casts doubt on the Puerto Rico Electric Power Authority’s prospects for a consensual debt restructuring agreement.

The Supreme Court has agreed to take up Puerto Rico's appeal of a lower court ruling that the commonwealth's local restructuring law is not allowable under federal bankruptcy law.

The FBI arrested 10 Puerto Rico officials and businessmen in a corruption probe, dealing a blow to the government as it looks to resolve its financial crisis.

Puerto Rico general obligation debt (CC/Negative) continues to remain highly vulnerable to default, in Standard & Poor's Ratings Services' view, despite payment in full by the Government Development Bank for Puerto Rico (GDB) of $354 million in scheduled debt service on Dec. 1, including $267 million of GDB note principal guaranteed by Puerto Rico, and the governor's release of an executive order that diverts revenue, which would otherwise support about $7 billion of non-GO debt issued by certain public corporations, to the payment of GO debt service.

Puerto Rico’s economic activity index rose 0.2% in October from September and 1% from October 2014.

Municipal investors said Puerto Rico’s $355 million Government Development Bank note payment and claw-back debt management plan did little to resolve the island’s debt crisis.

Standard & Poor's Ratings Services said the ratings on the Government Development Bank for Puerto Rico (GDB; CC/Negative/C) are unchanged, but continue to reflect the company's weak debt service prospects.

Puerto Rico signaled it’s giving some debts priority over others, as it began clawing back revenue from certain non-general obligation bonds while avoiding default on $355 million of Government Development Bank notes.

Puerto Rico announced late this morning that it had paid all $354 million in debt service due today on Government Development Bank notes.