Puerto Rico

Puerto Rico faces a $153 million cash deficit by December and a $512 million shortfall by June unless it takes additional financial measures, according to a consultant to the government.

Lobbying efforts more than doubled in the second quarter of this year over pending legislation that would give Puerto Rico utilities and authorities access to Chapter 9 bankruptcy protection.

Standard & Poor's Ratings Services said it has corrected by reinstating its D rating on Puerto Rico Public Finance Corp.'s series 2012A bonds due Aug. 1, 2015.

The Puerto Rico Aqueduct and Sewer Authority plans to sell a $750 million bond by the end of August, anticipating paying a roughly 10% interest rate.

The default by the Puerto Rico Public Finance Corporation is a credit negative for bond insurers MBIA Inc. and Assured Guaranty, who each have approximately $5 billion of exposure to the commonwealth, according to a report issued by Moody’s Investors Service.

Detroit's bankruptcy and Puerto Rico's default are similar to New York City's mid-1970s crisis, public finance veteran Richard Ravitch says.

Puerto Rico's recent decision to stop setting aside money for its general obligation bonds set off debate over how and whether the government will make its Jan. 1 GO payment.

Using dynamic scoring, the Joint Committee on Taxation has estimated that legislation to extend tax provisions, including several related to bonds and Puerto Rico, would result in only $86.56 billion of revenue losses, compared to its earlier estimated $96.95 billion.

Moody's Investors Service has reviewed the new restructuring proposal filed by the Puerto Rico Electric Power Authority (PREPA; Caa3 negative), which states that non-forbearing bondholders would recover 65%-70% of the original legal promise in cash, depending on maturity, and which makes default a virtual certainty.

Trading activity in the municipal market for the second quarter of this year was 14% higher than the previous quarter as well as the second quarter last year, with several Puerto Rico bonds among the most traded, according to the Municipal Securities Rulemaking Board.

Puerto Rico issues were mixed in rather quiet trading on Tuesday after Standard & Poor's lowered its rating on the Puerto Rico Public Finance Corp. S&P dropped the PFC's $1 billion of Series 2011A, 2011B, and 2012A bonds to D from CC following a payment default on the bonds.

Standard & Poor's Ratings Services said it has lowered its rating on $1.0 billion of Puerto Rico Public Finance Corporation (PFC) series 2011A, 2011B, and 2012A bonds to D from CC following a payment default on the bonds as of the close of business Aug. 3, 2015, the first business day following the Aug. 1 stated due date, which fell on a Saturday.

The PRPFC is paying about $628,000 in interest, according to Government Development Bank for Puerto Rico president Melba Acosta Febo. About $58 million in principal and interest is due Monday.

In Fitch Ratings' opinion, Puerto Rico's reported decision to miss an August 1 debt service payment on appropriation-backed debt (not rated by Fitch) due Monday, Aug. 3, is consistent with both the commonwealth's stated intent to restructure its debt and its current liquidity pressures.

Puerto Rico’s government has suspended setting aside money for its general obligation debt, increasing concern among some investors that even the island’s government-guaranteed debt may not be paid.

Puerto Rico’s economic activity index was down 0.3% in June from May.

Puerto Rico Public Finance Corp. may miss a $58 million bond payment due Monday, in what could be the first volley in the biggest municipal default in history.

Popular Inc. is planning to sell its $75 million Puerto Rico Electric Power Authority line of credit at a 40% discount.

Treasury Secretary Jack Lew’s recommendation Tuesday to grant Puerto Rico municipalities and public entities access to Chapter 9 bankruptcy protection failed to convince Sen. Orrin Hatch, R-Utah, that the administration has the clear plan that’s needed before Congress can act to help the territory.

Puerto Rico Electric Power Authority moved a step closer Tuesday to cutting costs through the use of natural gas rather than oil for electricity production, as a Federal regulator authorized marine terminal off of Aguirre.