Hernández Presents Amendments to Debt Moratorium Act
A group of 21 House representatives, headed by Treasury Committee Chairman Rafael “Tatito” Hernández, introduced Wednesday amendments to the law that will allow the commonwealth to stop payments on debt.
The amendments were presented barely hours after Gov. Alejandro García signed the debt moratorium bill into law.
Hernández voted in favor of the bill after insisting during the debate that he was going to cast a vote against it unless general obligation (GO) bonds, which are backed by the commonwealth’s full faith and credit, were excluded from the proposed debt moratorium.
Caribbean Business learned that La Fortaleza agreed to his demands, urging him to present the amendments, in exchange for his vote because the government wanted to stamp his signature on the measure as soon as possible to deal with the crisis at the Government Development Bank (GDB).
The newly signed Puerto Rico Emergency Moratorium & Financial Rehabilitation Act seeks to provide a new receivership process to deal with the financially battered GDB, which, according to the bill, only has around $560 million in liquidity.
The amendments Hernández presented would exclude not only GO bonds, but also debt guaranteed by the securitization of credits, which would cover the bond securitization of the island’s main utilities, namely the Puerto Rico Electric Power Authority and the securitization proposed for the Aqueduct and Sewer Authority.
“Regardless of the provisions of this Act, all bonds and notes outstanding or to be issued that are guaranteed by the full faith and credit of the Commonwealth of Puerto Rico and all bonds and notes outstanding or to be issued that are guaranteed by the securitization of certain revenues of the issuer under a Trust Agreement established for those purposes are excluded from all the provisions set forth herein,” states the bill.
Earlier Wednesday, Prepa officials announced delays in the bond purchase agreement because advisors wanted to evaluate the impact of the debt moratorium on the restructuring support agreement for the power utility’s $9 billion debt.