Puerto Rico Bondholders Give Promesa Mixed Reviews
SAN JUAN – Economists and bondholders agreed Monday that the Puerto Rico Oversight, Management & Economic Stability Act (Promesa) bill is a good start in taking the commonwealth government to recovery, but objected to several dispositions that would allow for a stay on claims and debt restructuring.
Their remarks were made in two panels that analyzed Promesa during the First Encounter of Bondholders, organized by Bonistas del Patio, which represents more than 60,000 local bondholders. Caribbean Business Executive Editor Philipe Schoene Roura moderated two of the panels and reporter Luis Valentín participated in one panel.
Héctor Negroni, Co-CEO of Fundamental Advisors, which has been involved in attempts to negotiate with Puerto Rico debt issuers, said he may challenge the provision that imposes a stay on legal claims imposed by Promesa.
“The stay on Promesa is a fairy tale. The stay stops you from pursuing your rights…,” he said.
Nader Tavakoli, president & CEO of Ambac, a monoline insurer that sued the government because of the debt defaults and clawbacks, or tapping into revenue streams originally destined for other debt, said if the federal fiscal-control board is imposed by Promesa, Ambac would also challenge the stays if the board does not do what it is supposed to do, such as shrinking the size of government.
In a panel titled “The Truth about the Territorial Control Board,” Javier Ortiz, a partner at Falcon Cyber Investments, said the three most important aspects of Promesa are the stay on lawsuits, the creation of a bicameral commission that would look into Puerto Rico’s economy and the appointment of the fiscal control board.
“Ultimately, the fact that something is happening is good,” he said.
Promesa was passed by the U.S. House of Representatives and is slated to be voted by the U.S. Senate as soon as this week.
Steven Hart, CEO of Williams & Jensen, a lobbying firm, said he had more problems lobbying in Washington, D.C., with the rank and file members of Congress instead of the leadership because of the general lack of knowledge about Puerto Rico. He noted problems with the Freedom Caucus, the conservative House Republican group, which did not know how Puerto Rico’s problems trickle into other financial problems.
The individuals who participated in another panel called “Promesa: Perspectives from the Creditor Camp,” made a list of the bill’s positive and negative points. They emphasized on the need to jumpstart the local economy to ensure the government complies with debt payments.
Look Thursday for the print edition of Caribbean Business for the full report.