Senate Democrats to Voice Support for Granting Puerto Rico Restructuring Tools

SAN JUAN – As Puerto Rico prepares for another U.S. Congress hearing to discuss the island’s crisis, Democratic senators reportedly will be soon releasing a letter calling once again for granting the commonwealth access to a debt-restructuring mechanism.

According to Reuters, the letter would be addressed to Senate Majority Leader Sen. Mitch McConnell (R., KY.), in an effort to prevent any GOP-led legislation that imposes federal fiscal oversight on the island without including access to a restructuring mechanism.

Citing a source in Congress, Reuters further reported that all 44 Democratic senators as well as two independent senators are expected to sign the letter, which could allow them to block in the upper chamber any legislation deemed unfavorable to Puerto Rico.

The U.S. House Indian, Insular & Alaska Native Affairs Subcommittee will hold a hearing Feb. 2 on the potential establishment of a federal fiscal control board on Puerto Rico. Citing a source familiar with the letter, Reuters reports the letter could be made public ahead of the hearing.

Last year, three high-ranking Republican senators presented a bill that seeks to implement a federal fiscal control board on the island, although without access to a debt-restructuring regime. Instead, the bill also proposes to tap Affordable Care Act or Obamacare funds to provide short-term liquidity assistance to Puerto Rico.

The commonwealth government is banking on congressional action, particularly over access to Chapter 9 of the federal bankruptcy code, as it tries to avoid additional defaults amid a debt-service schedule that becomes steeper this summer. Access to Chapter 9 would allow the island to restructure about $20 billion of the island’s $70 billion debt load.

House Speaker Paul Ryan (R., Wis.) has said the lower chamber aims to come up with a solution to the Puerto Rico issue before the end of March.

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