Bondholders Also Object to Proposed Financial Oversight Board

SAN JUAN – Bondholders of Puerto Rico’s debt joined government officials Monday in expressing disappointment, but for different reasons, regarding legislation the U.S. House Natural Resources Committee is expected to present this week that would impose a strong, independent fiscal oversight over Puerto Rico.   

Main Street Bondholders, the largest coalition of independent Puerto Rico bondholders, said the draft bill removes a consensual alternative for Puerto Rico to deal with its $70 billion debt.   

“We are extremely disappointed Chairman [Rob] Bishop has put forth such a highly political bill, one that endangers a consensual solution between the Puerto Rican government and constitutional bondholders,” Matthew Kandrach, vice president of the 60 Plus Association, which created the coalition, said in a statement. “The bill is a toxic combination of Nancy Pelosi’s legal stay and the dangerous, precedent-setting Super Chapter 9 proposal that congressional Republicans supposedly rejected last year.”

According to the group, as written, the bill gives the island the ability to restructure 100 percent of its debt, regardless of seniority or protections established in Puerto Rico’s Constitution. “The bill makes clear its disregard for Puerto Rico’s Constitution and the rule of law, not to mention the disastrous impact it will have on ordinary workers, retirees and pensioners.

“At the same time, the bill ensnares bondholders in an unprecedented and likely unconstitutional stay of legal recourse. This is unprecedented in U.S. history, and is likely a violation of the Takings Clause of the U.S. Constitution,” they said.

“With this bill, Congress has effectively halted efforts to reach a consensual deal with the Puerto Rican Government,” group member George Carroll said. “This is not a reasonable solution, but an impediment to one and a huge setback to all progress that has been made up to this point.”

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