Puerto Rico Gov. Alejandro García Padilla is not supporting legislation to allow public corporation bankruptcy, though he has discussed the subject, a person close to the governor said.
The governor met with legislators Tuesday night in the governor's offices, according to El Nuevo Día newspaper. A possible bill to allow the corporations to declare bankruptcy was discussed, the newspaper said.
The governor and his team are not supporting a public corporation bankruptcy bill at this time, the person in the governor's office said. The governor did discuss the topic with legislators, the source said.
The governor has been demanding that the public corporations operate without general fund subsidies.
Some bond analysts have said recently that one of the public corporations, the Puerto Rico Electric Power Authority, has substantial hurdles in the near term. It has outstanding loans of $671 million due in July and August based on a $250 million line of credit and a $550 million line of credit. PREPA is seeking an extension of the lines, and it is unclear if it will succeed, according to Fitch Ratings managing director Dennis Pidherny.
If it does not succeed, PREPA probably would turn to the Government Development Bank of Puerto Rico for short-term assistance to avoid a default, Pidherny said. This would absorb some of the GDB's resources.
Puerto Rico's government this month declined to comment on its plans to deal with PREPA's expiring lines of credit.
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Puerto Rico Governor Doesn t Support Public Corporation Bankruptcy
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