Puerto Rico debt negotiations are going nowhere even though there are just six full days left before a court may take over the $52 billion bond and loan restructuring.

Holders of the territory's general obligation bonds have seen no “credible progress” toward an agreement since the start of negotiations on April 13, according to a source aligned with that group.

In an interview Monday the source responded to a report Friday by Reuters that lawyers for Puerto Rico were preparing a forbearance agreement to allow a continuation of debt talks beyond May 1. Puerto Rico Oversight, Management, and Economic Stability Act’s stay on debt litigation is scheduled to end on that date. The creditors would be asked to sign the agreement to promise that they would not launch suits after May 1.

Gov. Ricardo Rosselló has indicated that debt negotiations must observe the Puerto Rico Oversight Board's allotment for debt.
Gov. Ricardo Rosselló has indicated that debt negotiations must observe the Puerto Rico Oversight Board's allotment for debt.

The general obligation holders said his group had seen nothing like this, the source said, questioning why the bondholders would join a forbearance when there has been no progress.

“Who knows if it is even real,” he added.

Members of the administration of Gov. Ricardo Rosselló and others have said that before the May 1 deadline they expect the Puerto Rico Oversight Board to exercise its right under PROMESA’s Title III to petition a court to handle debt restructuring.

The Title III process would take place in the federal district court for Puerto Rico in San Juan. The Oversight Board could start the process before May 1.

On March 13 the board approved a 10 year fiscal plan for Puerto Rico allotting enough money to pay about 24% of the debt the Commonwealth owes in the period. According to several sources including Rosselló, since the start of the negotiations on April 13 government representatives have focused on trying to get the bondholders to make an offer within the board’s limit on debt service.

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