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posted by n1 on Sunday May 07 2017, @04:45AM   Printer-friendly
from the my-2c dept.

Puerto Rico announced a historic restructuring of its public debt on Wednesday, touching off what may be the biggest bankruptcy ever in the $3.8 trillion U.S. municipal bond market.

While it was not immediately clear just how much of Puerto Rico's $70 billion of debt would be included in the bankruptcy filing, the case is sure to dwarf Detroit's insolvency in 2013. The move comes a day after several major creditors sued Puerto Rico over defaults its bonds.

Bankruptcy may not immediately change the day-to-day lives of Puerto Rico's people, 45 percent of whom live in poverty, but it may lead to future cuts in pensions and worker benefits, and possibly a reduction in health and education services. The island's economy has been in recession for nearly 10 years, with an unemployment rate of about 11.0 percent, and the population has fallen by about 10 percent in the past decade.

The bankruptcy process will also give Puerto Rico the legal ability to impose drastic discounts on creditor recoveries, but could also spook investors and prolong the island's lack of access to debt markets.

The debt restructuring petition was filed by Puerto Rico's financial oversight board in the U.S. District Court in Puerto Rico on Wednesday, and was made under Title III of last year's U.S. Congressional rescue law known as PROMESA.

The Title III provision allows for a court debt restructuring process akin to U.S. bankruptcy protection. Puerto Rico is barred from a traditional municipal bankruptcy protection under Chapter 9 of the U.S. code.

The filing includes only Puerto Rico's central government, which owes some $18 billion in debt backed by the island's constitution. On paper, it does not include $17 billion of sales tax-backed debt, known as COFINA debt, or debt from other agencies.

But those debts are likely to be pulled into the bankruptcy, or included in separate bankruptcy proceedings in coming days, Elias Sanchez, an adviser to Governor Ricardo Rossello, told Reuters on Wednesday. Puerto Rico's massive pension debts will also likely get restructured in the bankruptcy. "Title III was especially compelled by the commonwealth's need to restructure $49 billion of pension liabilities," the oversight board said in Wednesday's filing.

-- submitted from IRC


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  • (Score: 2) by JoeMerchant on Sunday May 07 2017, @04:34PM (1 child)

    by JoeMerchant (3937) on Sunday May 07 2017, @04:34PM (#505886)

    If management didn't lower overall expenses while growing the top-line income numbers, they wouldn't be doing their jobs... it's what was promised in the acquisition (your situation may vary, slightly, but the sentiments are universal.)

    About the cost of cell-phones ~ 20 years ago, I got a Ham license and a couple of handheld tri-bands so I could hit the local 2m and 70cm repeater towers - no monthly fees, handsets were a little pricey, but within a year they were cheaper than two cellular contracts' payments. Theoretically, they could patch into the POTS - a blind guy at University had that setup for his and nobody bothered him about it, but it was clearly outside the rules.

    Finally, we bought a cheap used car and considered a "real" cell-phone as breakdown insurance, cheaper than buying something more confidence inspiring (though, in practice, the car never did break down.) Once the first baby came around, had to get the second line - can't have a husband/father without a leash, can we?

    What people are buying today aren't communication devices, they're portable super-computers. It's just that nobody in 1990 realized that they might want to carry one around, it took Facebook and Instagram to market that desire into the mainstream. I won't bother quoting how expensive, bulky and underpowered computers of the 1990s were in comparison to a $199 no-contract Nexus 5x.

    So, cell-phones "saved" thousands of dollars by enabling the use of dodgy used cars, and now they're "saving" thousands more by providing stupid amounts of computer power and network connectivity for a low low $39 per month per line. Too bad all that computer power hasn't produced a solution for global warming or overpopulation yet - if it eventually does, it will have been a bargain - the way nuclear weapons were so much better than fighting WWIII without them.

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  • (Score: 3, Insightful) by HiThere on Sunday May 07 2017, @05:31PM

    by HiThere (866) Subscriber Badge on Sunday May 07 2017, @05:31PM (#505916) Journal

    It may actually be helping with overpopulation. It's hard to be certain, but evidence seems to show that when there are more flashy things to buy people tend to have fewer children.

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