Tuesday, March 31, 2015

Republicans Abandoning Principles In Bailout For Puerto Rico

It is truly dismaying that a Republican-controlled Congress is entertaining the idea of a financial bailout of Puerto Rico. Doing so would fly in the face of conservative principles and betray the taxpayers who elected candidates who were supposedly committed to standing up to government excess and incompetence.
A House Judiciary subcommittee – under the direction of Reps. Bob Goodlatte, R-VA and Tom Marino, R-PA – is moving to extend Chapter 9 bankruptcy protection to Puerto Rico. Chapter 9 allows U.S. states and municipalities to void the responsibility of the debts it legally and knowingly incurred. The most glaring example of Chapter 9 is Detroit, which waited too long to make the meaningful reforms it obviously needed.
As a U.S. territory, Puerto Rico cannot currently invoke Chapter 9. The bill before Congress would change that, and would set in motion a process that would enable Puerto Rico to walk away from its failures, leaving U.S, taxpayers and pensioners holding the bag.
Puerto Rico has a mind-boggling $73 billion in debt that has no chance of being repaid because there is no political will to undertake the budget cuts, pension reform, and tax policy overhaul that is necessary. If anything, Puerto Rican Governor Alejandro Garcia Padilla is a leader in the mold of Argentina’s Christina Kirchner when it comes to debt obligations. He is more skilled in contortions to avoid paying debts and in keeping cronies in place than making the tough calls to right the island’s financial and political health.
Over the past year, Governor Garcia Padilla has undertaken a series of decisions that call into question his commitment to the rule of law and freedom of contracts. First, he signed into a law in the dark of night a debt-avoidance bill (the Debt Enforcement and Recovery Act), which was designed to allow the government to repudiate the billions in bonds they took out from unwitting U.S. investors, from large creditors to family savings and retirements (i.e. – 401(k)s). The act was found to be illegal by a U.S. federal judge. Signaling this was not enough, Garcia Padilla’s party (aptly known as the ‘Reds’) introduced legislation recently that would authorize the government to rip up previously agreed-to bond contracts.
It is fitting that all of the ratings agencies have downgraded the island, and is considered the second-most likely place in the world to default on its debts. Puerto Rico beats out only Argentina, a country long in the throes of financial turmoil, and for similar reasons
As a U.S. territory, Puerto Rico’s problems are ultimately the problems of the United States. Expanding Chapter 9, however is not the solution, at least not the solution that principled conservatives should embrace. Members of Congress who stand for sound governance and fiscal responsibility should not be fooled. If Puerto Rico is given the Chapter 9 option, thousands of Americans whose 401(k)s and mutual funds are invested in Puerto Rico’s bonds and would suffer losses and taxpayers would have to pay for a bailout.
To make matters worse, proponents want Chapter 9 applied retroactively. During the Judiciary subcommittee hearing Rep. Darrel Issa, R-CA, took a principled view of this idea, and should be commended by conservatives. Hopefully other Republicans, including Reps. Goodlatte and Marino, will stand with Rep. Issa, and reject Chapter 9.
Instead of asking taxpayers and investors to subsidize decades of poor leadership in Puerto Rico, Congress should insist on a comprehensive review of what went wrong and focus on a long-term game plan to ensure it never happens again. The best approach is a federal board of control similar to what worked for the District of Columbia 20 years ago. Our capital city’s debts were paid and budgeting reforms were imposed. Before long, investments and economic growth replaced dysfunction, crime, and decline.
It is time for legislators to stand up for taxpayers and investors of all sizes, and affirm the rule of law. Let us hope the hearing on Chapter 9 bankruptcy was the last stop for that ill-advised idea. Now that Congress gave the bill it’s proverbial day in court, members need to work on a plan for Puerto Rico’s debt that does not shortchange the American taxpayer.
Mario H. Lopez is President of the Hispanic Leadership Fund, a national advocacy organization that promotes liberty, opportunity, and prosperity for all Americans.
MARIO H. LOPEZ
President, Hispanic Leadership Fund
Republicans Abandoning Principles In Bailout For Puerto Rico

Monday, March 30, 2015

If it doesn't look like junk or smell like junk, why is it junk?

Ratings agencies have made their feelings on Puerto Rican bonds pretty clear – they're junk. First, Puerto Rico's passing the Recovery Act caused them to downgrade the debt. Then, the courts striking down the Recovery Act caused them to downgrade again. So that's two downgrades for a law that was passed and then blocked, or two downgrades for nothing.

It's time to take a step back and look at where Puerto Rico stands.

First, while historically it's been a heavy borrower, the Commonwealth should be credited for reducing its deficits from $2.5 billion to just $800 million over two years and consistently making payments on its debt obligations. In fact, in 2015, the Commonwealth is projecting a balanced budget, the first in 20 years.

Second, Puerto Rico has also attempted to ring-fence its debt. Even prior to the Recovery Act, Puerto Rico launched a series of tough budget initiatives at state-run enterprises. Already, wage freezes, firings, and reforms are now on the agenda of every state-owned board of directors. The Recovery Act has been struck down in court, but this ruling doesn't take away from the government's intent to ring-fence the Government Obligation debt from public corporations. This debt is 40 percent of GDP – far lower than comparable sovereigns – and is serviceable going forward.

Now, they need to capitalize on these two initially positive steps with long-term economic rejuvenation.

With oil prices down, Puerto Rico needs to enact further reforms to boost their economy. The island's power authority, PREPA, will need to use the low oil price environment and other energy market changes to modernize Puerto Rico’s electricity system and its finances. For the economy more broadly, lower oil prices should boost spending, helping to create more jobs and new businesses. Juan Lara, chief economist at Advantage Business Consulting, has argued that the drop in oil prices could inject $2 billion into the Puerto Rican economy in 2015.  

Simultaneously, continuing targeted efforts to bring in international business should be more aggressively pursued. Puerto Rico provides a unique landscape for companies around the world due to its Latin American cultural roots. Further, the World Economic Forum's competitiveness report ranks Puerto Rico the 32nd most competitive economy in the world.  And businesses have taken notice. Last year, private investment backed the recent Lufthansa deal. In the pharmaceutical industry, a once significant employer on the island, shakeouts and consolidations are now being followed by increased investment. In fact, $650 million flowed into the Commonwealth last year, according to former Merck executive Ivan Lugo. More needs to be done to build off this foundation.

However, while they lay the groundwork for this growth, the Government Development Bank (GDB), Puerto Rico's government bond issuer and fiscal agent, will likely look to do another large bond issuance in the first half of this year.

Investors across the board want continued revenue enhancement and deeper reforms for the public corporations to believe in Puerto Rico once again.

On the former, tax reform has the ability to increase revenues and boost the economy by broadening the base, lowering rates, and functioning more efficiently. The initial report from KPMG suggests the value added tax plan for Puerto Rico may generate $2.5 billion more relative to current law. Puerto Rico projected a fiscal deficit of $800 million in 2014, just one-third the size of the potential gains from tax reform.

On the latter, the Commonwealth should explore two options. First, the Elected Executive can institute a control board to oversee public corporations and ensure effectiveness and efficiency in their operations. It should use this power to convene the stakeholders of all state-owned enterprises to discuss wage freezes, debt reorganization, and, further operational reforms.

Chapter 9 is one tool Congress should grant Puerto Rico, but Puerto Rico should only use it as a last resort. It does not replace business, civic and political leaders working to keep Puerto Rico a livable, thriving place to grow businesses and build communities.

Second, it should consider pulling some debt from troubled public corporations into a special investment vehicle and tying revenue – secured from those public corporations not the tax base – to service that debt. This act will provide some assurances to the market in restructuring scenarios.

Puerto Rican debt isn't junk. It's fairly serviceable and the government has made difficult but necessary steps to cut its costs and boost revenue. It's not the time to discourage the Commonwealth. It's time to encourage it to continue, and even deepen, these reforms and initiatives.

Sanzillo was the first deputy comptroller and acting state comptroller of the State of New York from 2003 to 2007. The first deputy comptroller has oversight responsibility for $300 billion in debt: $70 billion in state/related debt; $170 billion in authority debt and over $70 billion in local government debt.

By Tom Sanzillo

If it doesn't look like junk or smell like junk, why is it junk?

Puerto Rico Hotel Sector Reporting Strong Growth

Puerto Rico’s tourism sector is showing strong growth in 2015, according to new data from the Puerto Rico Tourism Company.

In February, hotel occupancy grew by 4.8 percent compared to the same period in 2014, rising to 86.1 percent.

Average daily rates also increased by 1.4 percent to an average of $189.59, while revenue per available room rose to $163.24.

“This increase in hotel occupancy, based on our preliminary numbers, combined with the record number of cruise ship visitors to the island, encourage us as we continue our efforts to increase visitors, strengthen maritime and air access, and offer a varied and attractive destination as well as maximize our efforts to promote Puerto Rico as a unique five-star destination,” said Ingrid Rivera Rocafort, the executive director of the Puerto Rico Tourism Company.

Overall, a total of 12,384 more hotel rooms were sold in February than the previous year, according to the PRTC.

The data is based on daily surveys conducted by the tourism company.

Puerto Rico Hotel Sector Reporting Strong Growth

Saturday, March 28, 2015

Puerto Rico to Receive World's 2 Largest Cruise Ships in '16

Puerto Rico is preparing to welcome the world's two largest cruise ships for the first time next year.

The executive director of the island's Tourism Company says Royal Caribbean's Allure of the Seas and Oasis of the Seas will bring an estimated 60,000 passengers to San Juan in 2016. Next year's visits are expected to generate an estimated $6.4 million in revenue.

Ingrid Rivera said Thursday that the ships will visit the U.S. territory a collective total of 10 times next year. Each ship can carry nearly 6,300 passengers.
Puerto Rico's government is pushing to attract more cruise ships amid an eight-year recession.

The island last month received a record 17,847 cruise ship passengers in one day.

Puerto Rico to Receive World's 2 Largest Cruise Ships in '16

Friday, March 27, 2015

Puerto Rico's PREPA meets creditors; new financing offered

Puerto Rico's electric power authority PREPA is trying to persuade creditors in a meeting on Thursday to give it more time to overhaul its business, as some bondholders push PREPA to accept new financing to avoid a default, according to sources familiar with the negotiations.

At a meeting in New York, PREPA will argue that creditors, who hold over $9 billion of its debt, should extend a forbearance agreement that expires on March 31. Once the agreement expires creditors have the right to accelerate their claims, potentially forcing the utility into insolvency.

Some of PREPA's creditors have offered additional financing to overhaul the utility's operations in return for concessions such as using a drop in oil prices to pay off debt, a source close to one of the bondholders said on Thursday.

"Bondholders will provide new financing to PREPA and PREPA will use that to modernize," the source said, describing the proposal. "One of the levers we would be looking for PREPA to pull is to use some of the saving in fuel costs to help reduce its debt burden."

Other measures needed to secure additional financing could include collecting unpaid electricity bills from the government and stepping up action on electricity theft, the source said. The source was not present at Thursday's negotiations.

PREPA did not return a request for comment.

The source, who asked not to be named because the negotiations were not public, estimated the savings to PREPA from the drop in oil at around $1 billion. Details on when the offer was made and the current status of talks were unclear.

The creditor group represents over 60 percent of PREPA's bondholders and includes large hedge funds such as Blue Mountain Capital and Appaloosa Management, mutual funds Oppenheimer and Franklin Templeton, bond insurers, as well as Citibank and Scotiabank.

PREPA missed a deadline on March 2 when it was supposed to present bondholders with a comprehensive restructuring plan. Earlier PREPA told creditors restructuring would likely take 10 years instead of an expected five years. The creditors did not take action when that milestone was missed.

Ratings agency Moody's has said it expects PREPA to default on or before July 1, the date of it next scheduled debt service payment. PREPA made a bond payment of about $214 million at the start of the year and faces another $400 million payment in July, according to Moody's. (Reporting by a contributor in San Juan and Edward Krudy in New York; Editing by Lisa Shumaker and Andrew Hay)

Puerto Rico's PREPA meets creditors; new financing offered

Luxury, Island Style: Mall Of San Juan Opens In Puerto Rico

Forget the beach, are you ready to splurge on a luxury handbag or gold cuff? Puerto Rico just added a luxury mall for its resident and tourist shoppers. The Mall of San Juan, a $475 million shopping center, opened Thursday.
Apart from anchor stores Saks and Nordstrom, other retailers either already opened or about to open include Versace, Bulgari and Gucci as well as more moderately priced retailers like Banana Republic or Bebe.
The shopping mall is less than a ten-minute drive from the island's main international airport and also near Old San Juan where cruise ships come in.
Despite Puerto Rico's serious financial troubles - on Thursday Fitch downgraded Puerto Rico's bond ratings - Puerto Rico has a strong retail sector. The AP reports sales grew 0.5 percent to $37.6 billion in the last year, including a 17 percent increase in women's clothing sales.
"We came to look but we'll buy something if it's at a good price," said one of the mall's first-day visitors, Ana Santiago, to Puerto Rican newspaper El Nuevo Día.
Luxury, Island Style: Mall Of San Juan Opens In Puerto Rico

Puerto Rico meets creditors over $9 bln debt load

Puerto Rico's indebted electric power authority PREPA will seek to persuade creditors in a meeting on Thursday to give it more time to restructure its business, according to a government official in Puerto Rico who was briefed on the matter.

At a meeting in New York, PREPA will argue that creditors, who hold over $9 billion of its debt, should extend a forbearance agreement that expires on March 31. Once the agreement expires creditors have the right to accelerate their claims, potentially forcing the utility into insolvency.

The official asked not to be named because the talks with creditors are not public.

PREPA did not return a request for comment.

The creditor group represents 60 percent of PREPA's bondholders and includes large hedge funds such as Blue Mountain Capital and Appaloosa Management, mutual funds Oppenheimer and Franklin Templeton, bond insurers, as well as Citibank and Scotiabank.

PREPA missed a deadline on March 2 when it was supposed to present bondholders with a comprehensive restructuring plan. Ealier PREPA told creditors restructuring would likely take 10 years instead of an expected five years. The creditors did not take action when that milestone was missed.

Ratings agency Moody's has said it expects PREPA to default on or before July 1, the date of it next scheduled debt service payment. PREPA made a bond payment of about $214 million at the start of the year and faces another $400 million payment in July, according to Moody's. (Reporting by a contributor in San Juan; Writing by Edward Krudy; Editing by Lisa Shumaker)

Puerto Rico meets creditors over $9 bln debt load

Puerto Rico to receive world's 2 largest cruise ships in '16

Puerto Rico is preparing to welcome the world's two largest cruise ships for the first time next year.

The executive director of the island's Tourism Company says Royal Caribbean's Allure of the Seas and Oasis of the Seas will bring an estimated 60,000 passengers to San Juan in 2016. Next year's visits are expected to generate an estimated $6.4 million in revenue.

Ingrid Rivera said Thursday that the ships will visit the U.S. territory a collective total of 10 times next year. Each ship can carry nearly 6,300 passengers.
Puerto Rico's government is pushing to attract more cruise ships amid an eight-year recession.

The island last month received a record 17,847 cruise ship passengers in one day.

Puerto Rico to receive world's 2 largest cruise ships in '16

Wednesday, March 25, 2015

Puerto Rico restructuring talk hurting demand for bond deal

Investors are losing interest in a proposed $2.9 billion bond deal that would provide a financial lifeline for Puerto Rico after three prominent legislators called for debt restructuring, according to three investor sources. Potential investors are holding back support in the wake of talk of restructuring by majority lawmakers, according to one source close to the deal. Three other investor sources said the talk had rattled investors and could kill demand for a deal now scheduled for early May.

"Right now there is no deal," said the source close to the deal, who added it could be delayed further or even put off indefinitely.

Puerto Rico is struggling with over $70 billion in total debt and must overcome opposition from local lawmakers as well as demands from investors for extra security as it attempts to sell more debt.

The US commonwealth had already delayed the bond deal from earlier this year, sources familiar with the matter previously told Reuters.

Meetings between government officials and investors are likely this week as expectations grow that Puerto Rico could undertake a wider debt restructuring than initially thought, the source close to the deal said.

"If the restructuring message keeps coming from high ranking officials, it can definitely impact the deal," said a prominent financial industry executive and former government official who often advises potential investors.

Three Popular Democratic Party lawmakers announced last week they would file legislation to amend the constitution to enable Puerto Rico's general obligation debt to be restructured.

The three lawmakers' amendment would have to be approved by a two-thirds majority in the legislature and then by a majority of voters in a referendum.

Their announcement came two days after the legislature made the proposed bond deal viable by approving a clause to adjust a petroleum tax hike.

The proceeds from the bond sale would go to repay a loan made by the Government Development Bank (GDB) to a highway agency, strengthening the finances of the government's lender of last resort.

Last Thursday, Senate President Eduardo Bhatia announced his intention to use this year's budget process to restructure the commonwealth government, which would involve spending cuts, increased tax revenue and negotiating to lower the central government's debt burden by lengthening maturities or lowering interest rates.

"We have to reduce spending, we have to renegotiate the debt and we have to increase revenue," Bhatia said. "These are the three exercises we are going to be working with over the next three months."

"We have to restructure part of the debt, but not paying it is not an option. There has to be a balance," he added.


Puerto Rico restructuring talk hurting demand for bond deal

Puerto Rico loses 80,000 manufacturing jobs in 15 years

Puerto Rico lost nearly 80,000 manufacturing jobs between 1997 and 2012, according to the latest Economic Census compiled by the University of Puerto Rico's Center for Census Information.

Jose Caraballo Cueto, the director of the center, told Efe that most of the jobs were lost as a result of the expiration of a provision in the U.S. tax code known as Section 936.

That regulation offered U.S. companies the prospect of tax-free income if they established operations in Puerto Rico.

"The elimination of those incentives was one of the main causes or problems in our economy, since many labor-intensive manufacturing companies left the country and other sectors of the economy have not created enough new jobs to absorb those workers," Caraballo said.

The number of manufacturing jobs in Puerto Rico declined from 163,605 in 1997 to 126,707 in 2002 and to 110,691 five years later. By 2012, the island's factories provided jobs to only 83,830 workers.

Local manufacturing business is weak and government programs to strengthen the sector are insufficient, Caraballo said.

"We need a stimulus to business initiatives on all levels," he said.

He also called also for a review of university curricula, complaining that business departments focus on preparing students to be managers rather than entrepreneurs. EFE

Puerto Rico loses 80,000 manufacturing jobs in 15 years

Tuesday, March 24, 2015

Nadia Barbarossa Joins Tax Credits International, Inc. to Direct Newly-Established Film Production Consulting Services in Puerto Rico | Business Wire

HUMACAO, Puerto Rico--()--Tax Credits International, Inc. (www.taxcreditsint.com) is pleased to announce that Nadia Barbarossa has joined the Company to direct its newly-established Production Consulting Services division, from the Company’s headquarters in Humacao, Puerto Rico. For five years, Nadia advised the Puerto Rico Film Commission with respect to its film tax credit program, certifying over $122 million in Puerto Rico production expenses. With Nadia’s expertise, TCI will market its new Puerto Rico Production Consulting Services to film production companies and studios in Puerto Rico, the US, and worldwide.

“Growing the Puerto Rico film industry will greatly benefit the local economy by stimulating economic activity, engaging local businesses, and creating jobs here on the Island. I look forward to working with TCI’s highly-respected team to attract more film business to Puerto Rico.”
“The addition of Nadia to our team is quite simply a perfect fit. Her expertise in production management allows us to provide a full spectrum of services, which, when coupled with TCI’s proven tax credit and incentives expertise, is a win-win for the industry”, commented Bruce Deichl, President of Tax Credits International, Inc. “Nadia is critical to our long term goal, which is to position the beautiful island of Puerto Rico as the top business and cultural destination in the world.”

Says Barbarossa, “Growing the Puerto Rico film industry will greatly benefit the local economy by stimulating economic activity, engaging local businesses, and creating jobs here on the Island. I look forward to working with TCI’s highly-respected team to attract more film business to Puerto Rico.”

Nadia Barbarossa holds a BA in Public Communications at the University of Puerto Rico and has completed her graduate work in Public History with a Concentration in Filmmaking and European Cultural History at American University in Washington D.C.

About Tax Credits International, Inc. For the past 16 years, the professionals of Tax Credits International, Inc. (“TCI”) have worked with tech/biotech companies, major film studios, and independent producers, placing over $900 million in various incentive tax credits with Fortune 500 companies. Through TCI’s exclusive US sales representatives, Tax Credits, LLC and Tax Transfer Corporation, TCI will continue to provide its tax credit placement and incentives services to clients throughout the US. TCI, a Puerto Rico Act 20 company itself, also provides Act 20 and Act 22 consulting services to foreign companies and individuals pursuing an Act 20/Act 22 exemption decree in Puerto Rico.



Contacts

Tax Credits International, Inc.
Contact:
Bruce Deichl, 908-251-4252
bdeichl@taxcreditsint.com
Lisa Nadal, Esq., 787-525-8050
lnadal@taxcreditsint.com
Nadia Barbarossa, 787-379-1846
nbarbarossa@taxcreditsint.com
or
US Sales:
Christine Peluso, Esq., 908-463-2168
cpeluso@taxcreditsllc.com
Nadia Barbarossa Joins Tax Credits International, Inc. to Direct Newly-Established Film Production Consulting Services in Puerto Rico

Puerto Rico’s First Luxury Mall Gets Set to Open

SAN JUAN – U.S.-based developer Taubman Centers plans to open Puerto Rico’s first luxury mall this week in San Juan, a $475 million project that is bringing retailers like Nordstrom and Saks Fifth Avenue to the island.

The company, which was founded in 1950, operates nearly 30 malls, the majority of them in the United States, and has a Hong Kong unit that runs similar properties in Asia.

The two-story Mall of San Juan will have 60,400 sq. meters (650,000 sq. feet) of space and offer shoppers more than 100 stores and restaurants.

The developer broke ground in September 2012 on the project, which is about three kilometers (1.8 miles) from the San Juan airport.

Taubman Centers chairman and CEO Robert S. Taubman, son of company founder Alfred Taubman, and The Mall of San Juan general manager Manuel Vazquez will officially open the shopping center on Thursday.

Puerto Rican shoppers have been eagerly awaiting the arrival of Nordstrom, which will occupy 9,300 sq. meters (100,000 sq. feet), and Saks Fifth Avenue, whose store will sprawl over 13,000 sq. meters (138,000 sq. feet).

The two upscale U.S. retailers are making their debut in the Caribbean market.

The Mall of San Juan will also offer shoppers the Gucci, Kate Spade, Jimmy Choo, Louis Vuitton and Versace brands.

Taubman Centers, which owns some Florida malls popular with shoppers from the Caribbean, plans to open a hotel and casino at the complex outside San Juan.

The Mall of San Juan’s main competitor will be Plaza Las Americas, the biggest shopping center in the Caribbean with nearly 300 establishments, but executives from both companies said their businesses targeted different segments of the retail market.

Puerto Rico’s First Luxury Mall Gets Set to Open

Puerto Rico restructuring talk hurting demand for bond deal

Investors are losing interest in a proposed $2.9 billion bond deal that would provide a financial lifeline for Puerto Rico after three prominent legislators called for debt restructuring, according to three investor sources.

Potential investors are holding back support after talk of restructuring by majority lawmakers, according to one source close to the deal. Three other investor sources said the talk had rattled investors and could kill demand for a deal now scheduled for early May.

"Right now there is no deal," said the source close to the deal, who added it could be delayed further or even put off indefinitely.

Puerto Rico is struggling with more than $70 billion in total debt and must overcome opposition from local lawmakers as well as demands from investors for extra security as it attempts to sell more debt.

The U.S. commonwealth had already delayed the bond deal from earlier this year, sources familiar with the matter previously told Reuters.

Meetings between government officials and investors are likely this week as expectations grow that Puerto Rico could undertake a wider debt restructuring than initially thought, the source close to the deal said.

“If the restructuring message keeps coming from high ranking officials, it can definitely impact the deal,” said a prominent financial industry executive and former government official who often advises potential investors.

Three Popular Democratic Party lawmakers announced last week would file legislation to amend the constitution to enable Puerto Rico's general obligation debt to be restructured.

The three lawmakers' amendment would have to be approved by a two-thirds majority in the legislature and then by a majority of voters in a referendum.

Their announcement came two days after the legislature made the proposed bond deal viable by approving a clause to adjust a petroleum tax hike.

The proceeds from the bond sale would go to repay a loan made by the Government Development Bank (GDB) to a highway agency, strengthening the finances of the government's lender of last resort.

Last Thursday, Senate President Eduardo Bhatia announced his intention to use this year's budget process to restructure the commonwealth government, which would involve spending cuts, increased tax revenue and negotiating to lower the central government's debt burden by lengthening maturities or lowering interest rates.

"We have to reduce spending, we have to renegotiate the debt and we have to increase revenue," Bhatia said. “These are the three exercises we are going to be working with over the next three months.”

“We have to restructure part of the debt, but not paying it is not an option. There has to be a balance,” he added.

GDB Investors Relations Director Todd Hagerman said Bhatia's comments and the House measure to amend the "have raised concerns among investors" but reiterated the administration's stance of honoring its commitment to holders of the commonwealth of Puerto Rico's debt.

"The constitution and the commonwealth have a very long history of protecting the rights, guarantees and the backstop related to bond investors," Hagerman said.

Maria de Lourdes Martinez, a spokeswoman for Senate President Bhatia, told Reuters Sunday that Bhatia "has been very vocal and persistent in saying that Puerto Rico and its leaders need to work on a reasonable arrangement with our bondholders that will alleviate the current fiscal crunch."



(Reporting by a contributor in San Juan; Editing by Megan Davies, Jane Baird and Jonathan Oatis)

Puerto Rico restructuring talk hurting demand for bond deal

Monday, March 23, 2015

Puerto Rico Ports Authority denies crisis as Crowley replace Horizon

The Puerto Rico Ports Authority has denied that the exit from the market of Horizon Lines has caused a serious crisis.

Horizon Lines ceased its Puerto Rican domestic service in late 2014, at around the same time it was bought by Matson Inc. The company had transported 30% of Puerto Rico’s imports.

The executive director of the country’s Ports Authority, Ingrid Colberg Rodrigues, said on 19 March that freight operations are “stable and secure”.

“The shipping industry keeps undergoing changes amid great challenges and Horizon’s exit is the most recent of these”, she said. “We’ll keep cooperating with [Puerto Rico’s] shipping sector to keep maritime transport operating.”

One of the three remaining shipping companies supplying the island is US-based Crowley Maritime Corporation, which is benefitting from Horizon’s departure.

The company announced in January, that it was adding an 800 teu capacity, flat deck barge to its South Atlantic-Puerto Rico service.

This barge is now on its way to Puerto Rico to begin operations and will increase the rotation between Jacksonville, Florida and San Juan, Puerto Rico, to four sailings each week. A company statement said that this would increase capacity by 200 loads per week.

The company’s vice-president, Jose Ayala, said: “Before Horizon left the trade, we had, on average, about 230 empty container slots each week on Crowley vessels. That space has been absorbed by customers.”

He continued: “In mid-December, we structurally modified our barge layouts to optimise the stow factor, which generated enough new capacity for another 100 loads a week.”

On 15 January, the company began running its vessels at an accelerated speed, increasing the frequency of its service and its weekly cargo capacity by 250 loads.

The company will also replace the existing 177 m triple-deck barges on the North Atlantic – Puerto Rico trade with larger 225 m ones, increasing capacity by over 40% in that lane.

“We completely understand that there has been some stress on the island’s supply chain given the abrupt departure of Horizon Lines from the market,” said John Hourihan, Crowley senior vice president.

“We have responded aggressively to replace the void they left, and are confident that current concerns will be short lived and that the island’s overall supply chain will be back to normal very soon,” he added.

Puerto Rico Ports Authority denies crisis as Crowley replace Horizon

Crowley will increase its Puerto Rico rotation
Puerto Rico Ports Authority denies crisis as Crowley replace Horizon

Saturday, March 21, 2015

UN Women not to partner with Uber in creating jobs

REUTERS: A United Nations organization for gender equality and empowerment of women said it would not collaborate with online taxi service Uber Technologies Inc.

Uber said last week that it would partner with UN Women to create 1 million jobs for women as Uber drivers by 2020. (http://bit.ly/1AdC7DQ)

"UN Women will not accept an offer to collaborate in job creation with Uber", Executive Director Phumzile Mlambo-Ngcuka said in a YouTube video uploaded by trade union federation Public Services International on Wednesday. (http://bit.ly/1MVu9Gg)

Uber was not immediately available to comment.

(Reporting by Anya George Tharakan and Subrat Patnaik in Bengaluru)
UN Women not to partner with Uber in creating jobs

Pierluisi to Convene Forum in Puerto Rico to Discuss Concerns About Jones Act in Wake of Horizon Lines Departure

San Juan, Puerto Rico—Resident Commissioner Pedro Pierluisi announced today that, given the increased concerns being expressed by his constituents about the Jones Act in light of Horizon Lines’ withdrawal from the Puerto Rico market, he will convene a forum in Puerto Rico to discuss the situation.  For that reason, Pierluisi sent a letter today to the Commissioner of U.S. Customs and Border Protection (CBP) and the Administrator of the U.S. Maritime Administration (MARAD), inviting senior officials from each agency to attend this forum.  The Resident Commissioner will also invite representatives from each of the Jones Act carriers that continue to provide service to Puerto Rico.  In addition, Pierluisi will invite officials from the local government, business leaders, manufacturers, farmers, economists, and other stakeholders.

According to Pierluisi, this forum will allow for a discussion about whether there are particular products that, as a result of Horizon’s departure, will no longer be available in Puerto Rico, will no longer be delivered on a timely basis, or will only be available at higher cost.

In addition, current law authorizes the federal government to grant an administrative waiver to the Jones Act when such a waiver “is in the interest of national defense.”

“This forum will provide CBP and MARAD an opportunity to offer guidance regarding the legal procedure by which an individual or organization in Puerto Rico can request an administrative waiver from the Jones Act;  the level of evidence that would need to be provided in order for the federal government to grant a waiver; and the respective roles of different federal agencies in the waiver process,” said Pierluisi.

The Jones Act requires that all maritime transport of cargo between U.S. ports be carried on vessels built in the United States, owned by U.S. citizens, and operated by U.S. citizen crews.  Since its enactment nearly a century ago, the Jones Act has applied to Puerto Rico.

“Whether one is a proponent or a critic of the Jones Act, there can be no doubt that the Jones Act only serves its intended purpose if there are sufficient Jones Act-compliant vessels ready, willing and able to transport cargo between U.S. ports.  As should be expected, many of my constituents are concerned that the departure of Horizon Lines will disrupt the marketplace, making it more onerous, time-consuming and costly to bring U.S. domestic products into Puerto Rico.  Indeed, numerous businesses and consumers have already reported such disruption.  At the same time, the remaining Jones Act carriers have indicated that they intend to increase the frequency and volume of their service to Puerto Rico and have requested meetings with my office to discuss the details of their plans,” said Pierluisi in his letter to CBP and MARAD.

“My constituents have raised important questions and concerns that require thoughtful and detailed answers from subject-matter experts.  The forum I will convene is designed to facilitate this dialogue.  According to GAO, as of June 2011, Horizon Lines transported products on a weekly basis between Puerto Rico and three U.S. ports:  Elizabeth, New Jersey; Jacksonville, Florida; and Houston, Texas.  Horizon Lines represented about 30 percent of the market share in Puerto Rico, and provided 38 percent (2,340 forty-foot equivalent units) of the total Jones Act capacity for Puerto Rico.  My constituents are concerned about whether the remaining Jones Act carriers can fill the substantial gap left by Horizon’s departure, particularly in light of the fact that Horizon was the only non-barge carrier that provided direct service between New Jersey and Puerto Rico.  My constituents want to understand whether these carriers can provide substantially equivalent service or if that service will vary in important respects, including in terms of the timing and cost of delivery,” added the Resident Commissioner.

“It is my hope that the federal government and the remaining Jones Act carriers can provide answers to my constituents’ reasonable questions, and I intend to provide the space and opportunity for this interchange to occur.  My office will continue to work with your staffs to make logistical arrangements for the planned forum,” concluded Pierluisi in his letter.

Resident Commissioner will invite federal and local officials, representatives from carriers, and stakeholders on the island

Pierluisi to Convene Forum in Puerto Rico to Discuss Concerns About Jones Act in Wake of Horizon Lines Departure

Friday, March 20, 2015

US govt awards Puerto Rico $27M to improve water quality

Puerto Rico is slated to receive $27 million in federal funds to improve water quality across the U.S. territory.

The U.S. Environmental Protection Agency said Thursday that the money will be used in part to improve wastewater treatment systems, protect natural resources and control pollution.
Two government agencies that provide loans for water-related projects will manage the funds.
Puerto Rico has received more than $700 million from the EPA for such programs since 1989.
US govt awards Puerto Rico $27M to improve water quality

Puerto Rico Bonds Seen Cheapening as Record Restructuring Looms

Puerto Rico’s power utility is moving toward a record restructuring of its $8.6 billion debt load. For high-yield municipal investors, the move may be a trigger to add the junk-rated commonwealth’s bonds.

The Electric Power Authority, called Prepa, is poised to reduce its obligations this year through negotiations with creditors. Such an agreement may cheapen Puerto Rico securities, which already trade at distressed levels, while clarifying how the commonwealth and its agencies may tackle $73 billion of debt, said John Miller, co-head of fixed income at Nuveen Asset Management. The company runs the biggest high-yield muni fund.

Signs of interest from mutual funds would be welcome news for the struggling U.S. territory, which has relied on buying by hedge funds. Traditional purchasers stepped back as the risk grew: 54 percent of muni mutual funds hold Puerto Rico bonds this year, down from 77 percent in October 2013, according to Morningstar Inc. Puerto Rico’s securities are widely held because they’re tax-free nationwide.

“There will be opportunities,” said Miller, who helps manage $100 billion of munis in Chicago. “We’re not there yet because nothing’s been restructured and we don’t know who is going to take the hits here.”

‘Dry Powder’

Nuveen reduced its allocation about two years ago, Miller said. Its $10.8 billion High Yield Municipal Bond Fund, the largest of its kind, didn’t hold any Puerto Rico as of Feb. 28, down from a 1.8 percent allocation on June 30, 2011, data compiled by Bloomberg show.

The firm has room to add commonwealth debt in its muni funds, Miller said.

“All of these funds have dry powder in their below-investment-grade buckets,” Miller said. “That’s another reason why we want to follow it closely and try to identify an opportunity.”

Debt of Puerto Rico has earned about 0.1 percent this year, compared with 0.8 percent for the entire municipal market, according to S&P Dow Jones Indices.

Some commonwealth debt has been gaining. Prepa bonds maturing in July 2040 traded Thursday at an average of 52.6 cents on the dollar, up from about 50 cents at the start of 2015.

Borrowing History

The island was cut to junk a year ago because of its history of borrowing to balance budgets. The territory and its localities have more debt than all but two states: California and New York. Its economy has struggled to grow every year since 2006, and its population shrank by 7 percent in the past decade to 3.5 million, according to Census data.

Governor Alejandro Garcia Padilla’s administration is trying to avoid defaulting on Puerto Rico’s $13 billion of general obligations. Legislators passed a law allowing some public corporations to ask investors to take a loss, which might ease their financial strains and free them from relying on the island’s general fund. A federal judge threw the measure out, although the island has appealed.

As a result, there’s no road map for agencies seeking to reduce debt, and Puerto Rico localities can’t file for Chapter 9 bankruptcy protection. That leaves investors guessing how large potential losses may be.

Puerto Rico’s general obligations may be at risk: there’s a high probability that the island will default on the securities in the next two years, Moody’s Investors Service said in a Feb. 19 report.

Commonwealth lawmakers this week filed a bill that would allow Puerto Rico to default on its general obligations.

“The credit-negative discussions, regardless of whether they culminate in enacted legislation, signal the rising likelihood of consolidated debt restructuring that affects not only public corporations, but also the central government’s general obligation and other tax-backed securities,” Ted Hampton, a Moody’s analyst in New York, wrote in a report Thursday.

Zero Sum

“At some point there’s going to be a buying opportunity,” said Peter Hayes, who helps manage $116 billion as head of munis at New York-based BlackRock Inc. “It will probably be an attempt at some type of restructuring, but will it be just in the public corporations or will it be in the general obligations? It remains to be seen.”

BlackRock’s $538 million High Yield Municipal Fund had 0.9 percent of assets in Puerto Rico as of Jan. 31, Bloomberg data show. While that’s up from zero a year ago, the allocation was about 6 percent in July 2012, Bloomberg data show.

Prepa may fail to pay of about $400 million of principal and interest due July 1, Moody’s said in a March 16 report.

The utility in August signed an agreement with creditors to extend bank loans through March 31. In return, the agency promised to file a debt-restructuring plan, which it has failed to do. The utility, bondholders, bond insurers and banks are discussing an extension. Moody’s estimates a recovery rate of 65 percent to 80 percent if Prepa defaults. It would be a historic restructuring for a municipal issuer.

The Government Development Bank, which handles Puerto Rico’s debt sales, declined to comment through David Millar, a New York-based spokesman.

Entry Point

Puerto Rico has proven volatile, so investors may not have to wait for a restructuring to buy.

General obligations sold in March 2014 at 93 cents rose to an average of 96.6 cents that month, then fell to 81.9 cents Feb. 9. The debt traded Thursday at about 84.1 cents.

“You can effectively exit and re-enter at will,” said Jason Diefenthaler, who helps manage Wasmer Schroeder’s $80.5 million High Yield Municipal Fund, which directs about 6 percent to commonwealth debt. “There’s always a way to get involved with Puerto Rico.”

Some investors already added as yields reached 10 percent, equivalent to a taxable 16.6 percent for top earners.

MacKay Shields LLC in New York boosted its holdings to $247 million in its four MainStay muni mutual funds as of Dec. 31, or about 10 percent of assets, up from 0.2 percent in October 2013, according to Morningstar.

The Puerto Rico bonds are insured, according to MacKay Shields.

Inaugural Year

In the inaugural year for Wasmer Schroeder’s High Yield Municipal Fund, Puerto Rico accounted for as much as 9.2 percent of assets in November. That allocation is now about 6 percent, all insured, said Diefenthaler, who helps manage $5.1 billion of munis at the Naples, Florida-based firm.

The fund, which debuted on March 31, can direct as much as 10 percent to Puerto Rico, Diefenthaler said.

“If we can opportunistically add more insured paper, I would be all over that,” he said. “The Puerto Rico name itself detracts from the value of that insurance in the secondary market, so there’s opportunity to pick up yield.”

To contact the reporter on this story: Michelle Kaske in New York at mkaske@bloomberg.net

To contact the editors responsible for this story: Stephen Merelman at smerelman@bloomberg.net Mark Tannenbaum, William Selway

Puerto Rico Governor Alejandro Garcia Padilla

Alejandro Garcia Padilla, Governor of Puerto Rico. Photographer: GV Cruz/WireImage


Puerto Rico Bonds Seen Cheapening as Record Restructuring Looms

Thursday, March 19, 2015

AbbVie and Puerto Rico Announce $30M Expansion

The Commonwealth of Puerto Rico and AbbVie announced today the expansion of one of AbbVie’s existing sites in the island with an estimated investment of $30 million. This expansion will add to Puerto Rico’s capabilities as a manufacturing destination for biotechnology and is expected to create up to 100 new jobs over the next two years.

“AbbVie’s expansion in Barceloneta is very important for us, as this site is one of the world's most advanced biopharmaceutical facilities, contributing to our island's growing reputation as a biotech hub”, said Puerto Rico governor Alejandro García Padilla.  “AbbVie's growth plans in Puerto Rico as well as its approach towards innovation and advanced therapies, gives us additional capabilities within the very competitive biopharmaceutical industry. Most important, their $30 million investment to expand their facilities is an encouraging expression of the company’s confidence in their future in Puerto Rico.”

The proposed expansion will take place in AbbVie’s site located in the northern municipality of Barceloneta.  This site is already home to two of the company’s state-of-the-art facilities.  According to Stephen Muldoon, vice president of engineering and operations for AbbVie, the company is focused on providing a significant impact on patients.  “This investment demonstrates our commitment to Puerto Rico as a key element of our global manufacturing network.  Our presence in Puerto Rico dates to 1969 and our patients benefit from our dedicated and talented local team”, added Muldoon.

The support of the Puerto Rico Industrial Development Company (PRIDCO) has been instrumental during the consideration of this project.  Given its strategic importance to Puerto Rico’s manufacturing capabilities, PRIDCO will promote the expansion with incentives for job creation and infrastructure.

“AbbVie’s expansion reaffirms Puerto Rico as a global manufacturing powerhouse where talented people combine with pioneer technologies to create biopharmaceutical products that have a significant role in the lives of many people worldwide”, explained Antonio Medina Comas, executive director of PRIDCO.  “We are committed to continue advancing our industrial development agenda, enabling similar investment opportunities to protect and expand our manufacturing footprint.”

AbbVie’s first manufacturing facility was established on the island in 1969.  In addition to its commercial presence, AbbVie has three manufacturing plants in the island and generates more than 1,000 direct jobs. All three AbbVie sites combined manufacture thirteen products that support the therapeutic areas of immunology, virology and metabolic disorders.

AbbVie and Puerto Rico Announce $30M Expansion

Refinancing its debt, Puerto Rico sells $246M in short-term bond notes backed by new oil tax

Puerto Rico's government said Tuesday that it has sold $246 million in bond anticipation notes to refinance part of its short-term debt and help generate more money for the financially strapped island.

The notes issued by Puerto Rico's Infrastructure Financing Authority were bought by Canadian RBC Capital Markets as part of a deal aimed at rescuing the island's Highways and Transportation Authority, one of several heavily indebted public corporations in the U.S. territory.

Bond anticipation notes are short-term debt that is usually issued before a larger, longer-term bond offering is made.

The anticipation notes are backed by an increase in the island's petroleum excise tax that Gov. Alejandro García Padilla signed into law just days ago.

"We are pleased that the legislature, after robust public debate and deliberation, enacted a law that facilitates PRIFA's access to market," said Melba Acosta, president of Puerto Rico's Government Development Bank, which oversees the island's debt transactions.

The new law raises the excise tax on a barrel of crude oil from $9.25 to $15.50 and aims in part to strengthen the finances of the Highways and Transportation Authority, which owes $2.2 billion to Puerto Rico's Government Development Bank, about 21 percent of the bank's portfolio.

Moody's has warned that the bank's liquidity could fall as much as 22 percent if there was no new bond offering to refinance the Highways and Transportation Authority's debt.

Puerto Rico is struggling with $73 billion in public debt, and the government is preparing to issue up to $2.95 billion in bonds to help generate more liquidity for the Government Development Bank and strengthen the island's public corporations.

Those agencies hold nearly 40 percent of the island's debt, and investors increasingly worry they might go bankrupt. On Monday, Moody's issued a report saying the island's Electric Energy Authority will likely default by July 1, when it is scheduled to make a roughly $400 million debt service payment.

Puerto Rico created a debt-restructuring law last year, but a federal court ruled it unconstitutional last month. In an appeal filed Monday, the government said the U.S. territory was facing the most serious fiscal crisis in its history and is unable to restructure its debt if needed.

"The district court's pre-emption holding puts Puerto Rico in an anomalous 'no man's land' where its public corporations cannot restructure their debts under either federal or local law," the appeal said.

PR Debt Bonds.jpg

Refinancing its debt, Puerto Rico sells $246M in short-term bond notes backed by new oil tax

Wednesday, March 18, 2015

Why Puerto Rico Needs a Total Tax Overhaul

Puerto Rico’s fiscal crisis is the result of many things, chief among them a tax system that is unfair, inequitable and complicated. It’s a complicated problem but it is not an unsolvable one.

The recession hit Puerto Ricans and Puerto Rican businesses hard, and too many have turned to gaming the tax system as a way to stay afloat. Our current system not only encourages this behavior, it penalizes work and productivity. It’s a system where some pay more to cheat than they would in taxes.

That’s why Puerto Rico’s tax system needs more than just a reform -- it needs a total transformation. That is the only way to guarantee justice and equity for everyone. We have seen the results of frequent stopgap measures and reforms. Those measures created the complicated system that taxpayers and the government battle with today.

The administration of Gov. Alejandro Garcia Padilla knows it is time to have a tax system that is stable and permanent, a system not subject to constant changes. The administration is also convinced it is time to move to a system under which taxpayers will contribute primarily through consumption taxes instead of through income taxes. Under a VAT system, Puerto Ricans will pay taxes on what they consume -- not on their work or on their productivity. It’s a self-regulating system employed as a central pillar of tax policy in more than 160 countries throughout Asia, Europe and South America.

Our current system places the burden on a few individuals while others intentionally hide their income from a system they know lacks the resources to pursue them. The gaps in the filings are obvious. We need more than a quick fix, or a superficial reform that would leave Puerto Rico in the same situation in the long run.

The world’s leading tax experts analyzed the situation in Puerto Rico and found that a system that depends primarily on the VAT will be more just and less complicated. In a VAT system the person who has been responsibly paying their taxes and the person who has been evading them will now both pay the same tax when buying a TV, a couch, or a table.

VAT applies to the majority of goods and services purchased in Puerto Rico and reduces evasion by taxing the level of consumption of each individual directly. By regulating the system through the chain of supply we eliminate opportunities for individuals to cheat.

Moving to a VAT system brings our formal, informal and underground economies into our tax system. And we need to bring our $16 billion underground economy into the light -- it’s the equivalent of one-quarter of our gross national product and is unaccounted for.

For responsible taxpayers, VAT means a dramatic reduction in their taxes; for businesses it means the potential for tax credits; for low-income families and our aging population it means reimbursements to help make ends meet. For 82 percent of Puerto Ricans, it means not having to file tax returns. For the government it means a more efficient tax process. 

It not only improves Puerto Rico’s tax system, but our chances at greater economic development. That development will lead to fewer people struggling to stay afloat and fewer people feeling a need to cheat the system.

Some think our country has hit rock bottom. Others, like myself, refuse to accept that fate and realize it is time to be brave and to act. We have seen other countries overcome similar crises. They’ve shown that if you make tough decisions you can reach a better future. There’s no question that a transition to value added taxes will take work, but it’s a change worth making. It’s a change Puerto Rico needs and deserves.


Juan Zaragoza Gomez, CPA, is the treasury secretary of Puerto Rico.
By Juan Zaragoza Gomez

Why Puerto Rico Needs a Total Tax Overhaul

The Email-Benghazi Nexus; Tax Reform in Puerto Rico; the Real St. Patrick; U.S. Presidents and Ireland

Good morning, it’s Tuesday, March 17, 2015. Today is St. Patrick’s Day, a semi-holiday that has morphed on these shores into a celebration more secular -- and more inclusive -- than it ever was in the old country. That place, of course, is Ireland.

On this day, tens of millions of Americans who wouldn’t know a shillelagh from a shebeen claim some Irish heritage. Among those who give themselves over to their inner Irishness is our African-American president, who today can be referred respectfully by his boyhood first name “Barry” -- as long as his last name is altered to O’bama.



President Obama meets with Republic of Ireland Prime Minister Enda Kenny this morning. Taoiseach (pronounced “tee-shock”) is Kenny’s actual title back home, and he will present a traditional bowl of shamrocks to Obama before both of them go to Capitol Hill for a luncheon hosted by House Speaker John Boehner. This evening, Obama will host a St. Patrick’s Day reception in the East Room of the White House.

These traditions, which are relatively new, have evolved over time. When the first shamrocks were delivered by an Irish taoiseach to the White House in 1952, President Harry Truman wasn’t even at home. But several U.S. presidents have journeyed to Ireland in the past five decades, and the political bonds between the two nations have become not only strong but substantive. The name of the U.S. president who deserves the most credit for this attachment might surprise you.

I’ll explain in a moment. First, I’d like to point you to RCP’s front page, which aggregates videos, polls, news stories, and an array of columns spanning the political spectrum. We also offer a complement of original material from RCP’s reporters and contributors, including the following:

* * *

Clinton Emails Rekindle Benghazi Panel Infighting. The brouhaha over the ex-secretary of state's private email server has emboldened GOP House members investigating the 2012 attack and fired up their Democratic critics, James Arkin reports. 

Why Puerto Rico Needs a Total Tax Overhaul. In an op-ed, the island’s treasury secretary makes the case for a consumption-based tax system.

Chris Matthews’ Obsession With Racism. RealClearScience editor Alex Berezow reminds the MSNBC host that his extraordinary claims of GOP racism require extraordinary evidence, which Alex finds lacking.

The Class Gap in Unplanned Babies. In RealClearPolicy, Kay S. Hymowitz examines a new study from the Brookings Institution.

Wall Street Bonuses Should Be a Great Deal Larger. RealClearMarkets editor John Tamny asserts that in order for the economy to be healthy, the epicenter of the investment world must itself be in top shape.

The EPA’s Dirty Clean-Power Secret. In RealClearEnergy, Dan Byers warns that under a proposed “clean power plan” the EPA could force states to take actions the agency itself cannot take.

Meet the Real Saint Patrick. In RealClearReligion, Pat Horan sheds some light on the man who was both slave and shepherd.

 * * *

Although many early U.S. presidents claimed some Irish ancestry, the first Irish-American who was also Roman Catholic to occupy the Oval Office was John F. Kennedy. Until JFK reached the White House in 1961, the only president to visit the Emerald Isle was Ulysses S. Grant -- and he didn’t make the trip (by boat, of course) until after leaving office.

Grant had led many thousands of Ireland-born troops during the Civil War and was proud of their performance in the field and their sacrifice to their adopted country. He mentioned this often during in his trip to Dublin. Grant also foreshadowed the future of Irish-American politics while addressing a Dublin crowd in early January 1879.

“I am by birth,” he noted, “a citizen of a country where there are more Irishmen, either native born or the descendants of Irishmen, than there are in all of Ireland.”

John F. Kennedy made a trip to the island in June 1963, a visit that is still talked about more than five decades later. Through the prism of modern Ireland, it’s difficult to imagine the galvanizing effect this visit had on the Irish. It had a similar impact on the young American president. The trip, noted the Cork Examiner, was “a union of hearts.”

Kennedy’s trusted Boston political aide Kenny O’Donnell had told the president that he already had all the Irish-American votes he was ever going to get and that the Ireland sojourn would be dismissed as “a pleasure trip.”

“That’s exactly what I want,” Kennedy replied.

In “One of Ourselves: John Fitzgerald Kennedy in Ireland,” author James R. Carroll explains why this was good for both sides. “[U]nderlying all the analysis about historical turning point, global status, economics and policy was a simple obvious fact,” Carroll wrote. “John Fitzgerald Kennedy touched a nation, and it touched him.”

Magic is hard to conjure up on command, but other presidents dutifully tried. Richard Nixon went to County Mayo, where his wife’s people had come from. Ronald Reagan visited a village named Ballyporeen, home of a great-grandfather named Michael Regan.

Bill Clinton, George W. Bush, and Barack Obama all made the trek. White House aides and political well-wishers of good intent would invariably attempt to find Irish blood in these men. Some of these efforts at tracing lineage were more dubious than others, but the spirit of the exercise was the important thing.

 “I didn’t know much about my family background -- not because of a lack of interest, but because my father was orphaned before he was 6 years old,” President Reagan told the crowd in Ballyporeen. “Now, thanks to you and the efforts of good people who have dug into the history of a poor immigrant family, I know at last whence I came. And this has given my soul a new contentment. And it is a joyous feeling. It is like coming home after a long journey.”

Both Kennedy and, later, Reagan employed the “No Irish Need Apply” meme, as do most Irish-American politicians. But what these men were really doing was telling those who’d stayed behind that although life in the new country hadn’t been easy, the promise of America had been realized by those who left. It was, and remains, a bittersweet message.

More troubling still was the sectarian troubles that re-emerged in Ireland even while JFK was still alive. Famed New York-born Taoiseach Eamon de Valera privately pushed Kennedy regarding Ireland’s traditional grievances with Great Britain.

“If you are weak in your dealings with the British, they will pressure you,” de Valera told his American counterpart. “Only if you are reasonable will they reason with you, and being reasonable with the British means letting them know that you are willing to throw an occasional bomb into one of their lorries.”

By the time William Jefferson Clinton was president, no political leader from the Republic of Ireland would talk that way, even in private, to a U.S. president. After 9/11, it became unthinkable.

But several years before the terrorist attacks, Clinton had helped set in motion a series of negotiations that all but quelled the violence. His Irish connection was first made in 1992 when he had yet to lock up the Democratic presidential nomination.

He’d lost the Connecticut primary very narrowly to former California Gov. Jerry Brown, and during the postmortem Clinton’s political advisers concluded that if they’d done better with the state’s white Catholic Democrats they’d have won.

So Clinton accepted an invitation he’d earlier declined: a forum in New York City on Irish issues. Jerry Brown, a former Jesuit seminarian and descendant of a County Tipperary clan, was going; moreover, Brown had announced that, as president, he’d appoint a special envoy to Northern Ireland, investigate British human rights abuses, and issue a visa to Sinn Fein leader Gerry Adams. Although these measures went against existing U.S. policy, Clinton quickly followed suit -- and at the forum he won over the crowd.

After winning the New York primary, the Democratic nomination (the convention was also in New York), and the presidency, Clinton honored his promise to involve himself in the fledgling Irish peace process. For the ensuing five years, he participated in numerous late-night negotiating sessions over the phone with political principles on all sides in the long Northern Ireland conflict.

When the stalemate was finally broken in 1998, British and Irish leaders gave Clinton much of the credit. “If I played a positive role,” Clinton responded with uncharacteristic modesty at an emotional White House ceremony, “I’m grateful to have had the chance to do so.”

In so doing, Clinton had fulfilled a promise long predicted for America.

As far back as 1867, William Gladstone had noted -- not approvingly -- that the British-Irish problem had “an American dimension.” In the 1880s, Home Secretary William Harcourt articulated the dark English vision of this dimension:

“In former Irish rebellions, the Irish were in Ireland,” he said. “We could reach their forces, cut off their resources in men and money -- and then to subjugate them was comparatively easy.

“Now there is an Irish nation in the United States, equally hostile, with plenty of money, absolutely beyond our reach.”

Not much had changed in the intervening century, including private American financial support to Irish Catholic paramilitaries. But as terrorism became a tactic viewed with deep disdain by almost all Americans, a more advanced and humane view of American involvement in Irish politics evolved. As Clinton arrived on the scene, this more pacific view was described by Irish author Tim Pat Coogan.

“Given American support, Ireland and England could be at peace,” he wrote in 1994. “Ireland and England are both mother countries. There is a time in life when parents look to their children for support. That time is now.”

The people of Ireland, particularly in the North of that island, were grateful for the attention Bill Clinton gave their troubles. In 1995, when he visited Derry, a huge throng assembled at Guildhall Square.

Seeing him on the dais, the crowd went into a chant, “Bull! Bull! Bull!” Perplexed, Clinton turned to Irish statesman John Hume. “Why are they saying that?’ he asked. Hume, familiar with the local dialect, smiled and replied, “They are saying your name.”

They were saying, “Bill! Bill! Bill!”



Carl M. Cannon
Washington Bureau chief, RealClearPolitics
@CarlCannon (Twitter)
ccannon@realclearpolitics.com

By Carl M. Cannon

The Email-Benghazi Nexus; Tax Reform in Puerto Rico; the Real St. Patrick; U.S. Presidents and Ireland 

RBC Buys $246 Million Note from Puerto Rico

RBC Capital Markets purchased a $246 million bond anticipation note from Puerto Rico Monday, supported by a recently passed oil tax increase.

by

RBC Buys $246 Million Note from Puerto Rico

Puerto Rico Sells $246 Million in Bond Anticipation Notes

Puerto Rico's government said Tuesday that it has sold $246 million in bond anticipation notes to refinance part of its short-term debt and help generate more money for the financially strapped island.

The notes issued by Puerto Rico's Infrastructure Financing Authority were bought by Canadian RBC Capital Markets as part of a deal aimed at rescuing the island's Highways and Transportation Authority, one of several heavily indebted public corporations in the U.S. territory.
The notes are backed by an increase in the island's petroleum excise tax that Gov. Alejandro Garcia Padilla signed into law just days ago.
"We are pleased that the legislature, after robust public debate and deliberation, enacted a law that facilitates PRIFA's access to market," said Melba Acosta, president of Puerto Rico's Government Development Bank, which oversees the island's debt transactions.
The new law raises the excise tax on a barrel of crude oil from $9.25 to $15.50 and aims in part to strengthen the finances of the Highways and Transportation Authority, which owes $2.2 billion to Puerto Rico's Government Development Bank, about 21 percent of the bank's portfolio.
Moody's has warned that the bank's liquidity could fall as much as 22 percent if there was no new bond offering to refinance the Highways and Transportation Authority's debt.
Puerto Rico is struggling with $73 billion in public debt, and the government is preparing to issue up to $2.95 billion in bonds to help generate more liquidity for the Government Development Bank and strengthen the island's public corporations.
Those agencies hold nearly 40 percent of the island's debt, and investors increasingly worry they might go bankrupt. On Monday, Moody's issued a report saying the island's Electric Energy Authority will likely default by July 1, when it is scheduled to make a roughly $400 million debt service payment.
Puerto Rico created a debt-restructuring law last year, but a federal court ruled it unconstitutional last month. In an appeal filed Monday, the government said the U.S. territory was facing the most serious fiscal crisis in its history and is unable to restructure its debt if needed.
"The district court's pre-emption holding puts Puerto Rico in an anomalous 'no man's land' where its public corporations cannot restructure their debts under either federal or local law," the appeal said.
By DANICA COTO

Puerto Rico Sells $246 Million in Bond Anticipation Notes

Tuesday, March 17, 2015

Puerto Rico's government bank posts increased liquidity in February

The liquidity position of Puerto Rico's Government Development Bank (GDB), the financing arm of the U.S. commonwealth, rose $33 million to $1.23 billion in February, the GDB said in a statement late on Friday.

The rise was the second monthly increase after liquidity dropped 30 percent to $1.09 billion from November to December. Puerto Rico is attempting to arrange a bond deal of up to $2.95 billion by April to improve its liquidity position. (Reporting by Edward Krudy; Editing by Chizu Nomiyama)

Puerto Rico's government bank posts increased liquidity in February

Saturday, March 14, 2015

Oil is on its way down again; will gasoline prices follow?

The price of oil has fallen close to its lowest price in six years, and many expect it to fall much further in the coming weeks because supplies are still heading up and the summer driving season is still months away.

The lower crude prices will mean gasoline prices will slide lower in the coming weeks, and many drivers will likely pay under $2 a gallon in the summertime for the first time since 2004.

Oil prices had appeared to stabilize in a range nearly 15 percent higher than the depths they had reached in late January. But on Friday the International Energy Agency called a recent rise in oil prices a "head fake" and a "facade of stability."

"The rebalancing (of supply and demand) triggered by the price collapse has yet to run its course," the agency wrote in its monthly oil market report.

On Friday, oil fell $1.95 or 4 percent, to $45.11 in midday trading, within $1 of its low for the year of $44.45. Here's what's behind the recent drop, and what else to look out for in the coming months.

FLOOD OF OIL

Oil has collapsed from over $100 because rising global supplies — especially in the U.S. — outpaced weak demand. The increase in U.S. production last year was the third-biggest one-year increase in the history of the global oil industry, according to BP.

That has pushed oil levels in storage to their highest ever in the U.S. and far higher than normal around the world. Analysts expect supplies to continue to build, forcing prices gradually lower, until refiners ramp up to make gasoline for the summer driving season.

But analysts say price of oil could fall sharply — to under $40 a barrel and perhaps even briefly to $20 — if supplies grow so much that storage tanks fill up.

WHAT ABOUT MY GAS PRICE?

Gasoline prices rise nearly every year around this time. This year has been no different. After reaching a low of $2.03 a gallon in late January, the national average retail price rose every day for more than a month, reaching $2.46 on March 7, according to AAA.

But the spring surge is likely over, according to Tom Kloza, chief oil analyst at the Oil Price Information Service. The national average has slipped lower every day for the past week, falling to $2.44 on Friday, and Kloza expects it to fall the rest of March and April.

The national average won't fall all the way to its January low, Kloza said, in part because refiners must still switch to more expensive summer blends of gasoline to meet clean air standards. But he expects drivers in much of the nation, especially in the South, to be paying less than $2 a gallon at times this spring and summer.

"This is something unique," Kloza says. "The market (decline) is going to make it so you don't even notice when your local station switches from winter to summer gas."

WHAT WILL PRODUCERS DO?

Low prices have forced oil companies to slash spending on new exploration and production, and forced oil service companies facing a slowdown in drilling to lay off thousands of workers.

When drillers stop sinking new wells into the ground, production begins to fall and prices rise. The number of rigs operating in the U.S. fell for the 14th straight week to their lowest since March of 2011, the oil services company Baker Hughes reported Friday.

But it is still unclear whether producers in the U.S. have cut back enough to help rebalance supply and demand. And while some OPEC members have called for the cartel to reduce output in an effort to force prices up, the group's most powerful member, Saudi Arabia, and other Gulf states have shown little interest in cutting back.

Despite the slowdown in drilling, U.S. production is still rising because projects started last year are still ramping up. Many oil companies say they can still make money at low prices if they drill only in their most cost-effective oil fields. But those fields are cost-effective because they produce a lot of oil, and that means output might not fall as much as expected.

U.S. production is not expected to start to slip until June, according to the Energy Department, and even then the declines are expected to be slight. And though U.S. production is expected to decline every month in the second half of the year, production in December of this year will still be higher than production during every month last year.

NEW YORK — The price of oil is on yet another ride down as swelling global supplies overwhelm rising but still relatively weak demand.

Oil is on its way down again; will gasoline prices follow?

Puerto Rico Agency’s Note Sale Shows Climbing Debt Expenses

A Puerto Rico agency plans to sell notes maturing in May 2017 with an interest rate of 8.25 percent, underscoring the rising borrowing costs for the junk-rated commonwealth.

The Infrastructure Financing Authority, called Prifa, plans to issue the notes, which would be paid off with proceeds of a later bond sale, according to a filing with the Municipal Securities Rulemaking Board. Prifa also expects to sell as much as $2.9 billion of bonds backed by petroleum-tax revenue.

Proceeds of that deal would repay the two-year notes, according to a person with knowledge of the transactions who requested anonymity because they’re not final.

Puerto Rico and its agencies tend to borrow through the capital markets to balance operating budgets. That practice and the island’s struggling economy prompted the three largest rating companies to drop the commonwealth to speculative grade in 2014.

The borrowing costs reflect the island’s fiscal stress. The interest rate on the notes is about 7.6 percentage points more than the 0.6 percent yield on benchmark debt, data compiled by Bloomberg show.

It would be the first borrowing from the commonwealth since the Government Development Bank in October sold notes maturing in June 2015 at a yield of 7.75 percent.

Repayment Plan

Funds from the fuel-tax bond are intended to repay money the Highways & Transportation Authority owes the GDB. The bank needs the cash. It said it had $1.2 billion of net liquidity as of Feb. 28, down from $2 billion in October.

The funding in Puerto Rico’s budget for the fiscal year that began July 1 is also uncertain. The island’s revenue through February is $121.7 million below budgeted estimates, according to Treasury Department data. That shortfall has grown from $18.8 million at the end of January.

As of Friday afternoon, the development bank hadn’t provided a comment or additional details about the note sale through its New York-based spokesman, David Millar. The bank handles debt transactions for the commonwealth.

Puerto Rico bonds rallied this week after the legislature on March 10 approved changes to the Prifa oil-tax bond sale to attract buyers. Debt from the island is tax-free nationwide, so it’s widely held by individuals and mutual funds.

General obligations maturing in July 2035 traded Friday at an average price of 85.4 cents on the dollar, the highest since Jan. 28, data compiled by Bloomberg show. The average yield was about 9.7 percent.

To contact the reporter on this story: Michelle Kaske in New York at mkaske@bloomberg.net

To contact the editors responsible for this story: Stephen Merelman at smerelman@bloomberg.net Alan Goldstein, William Selway



Puerto Rico Agency’s Note Sale Shows Climbing Debt Expenses

Friday, March 13, 2015

Moody s Downgrades University of Puerto Rico

Moody's Investors Service said it downgraded $489 million of University of Puerto Rico University system revenue bonds to Caa2 from Caa1 and $73 million of educational facilities revenue bonds, 2000 Series A issued through AFICA to Caa3 from Caa2.

Moody s Downgrades University of Puerto Rico

First BanCorp: FirstBank Puerto Rico Announces Acquisition of 10 Doral Bank Branches in the Island

The transaction includes approximately $600 million in deposits and $300 million in mortgage loans

SAN JUAN, Puerto Rico--(BUSINESS WIRE)-- Aurelio Alemán, President and Chief Executive Officer of FirstBank, subsidiary of First BanCorp, announced today the bank's participation in the acquisition of Doral Bank in alliance with Banco Popular de Puerto Rico, in which FirstBank acquired 10 branches.

This transaction includes 10 branches, approximately $600 million in deposits and a mortgage loan portfolio of $300 million, solidifying FirstBank's position as the second largest bank in Puerto Rico.

Aurelio Alemán expressed that, "as part of our commitment to Puerto Rico, we forged an alliance with a local competitor, Banco Popular de Puerto Rico, to acquire 10 branches of Doral Bank and a portion of its assets. We are convinced that this investment contributes to further strengthen the local banking sector, and thus the economic condition of Puerto Rico."

This acquisition expands FirstBank's branch network in Puerto Rico to 54, increasing its presence in geographical areas with growth potential for deposits and mortgage origination, two of the main business strategies of the institution. The new branches are located at Aguadilla, Bayamón Plaza del Parque, Bayamón Santa Rosa, Las Catalinas, Isla Verde, Humacao, Mayagüez Western Plaza, Los Paseos, Condado, and Vega Baja. These branches will open for business on the next business day, Saturday, February 28th.

As part of this transaction, FirstBank adds 100 employees to its more than 2,400 employee roster and acquires approximately 203,000 accounts of which the institution estimates that around 140,000 will be new clients. Currently, FirstBank has more than 600,000 clients. In addition, FirstBank acquires from Doral Bank more than 3,000 mortgage clients.

"We welcome Doral clients and would like to reassure them that they will be receiving our superior personalized service, which sets us apart in the industry," said Alemán.

Former Doral Bank clients will continue to conduct business normally through the new FirstBank branches, online banking, phone banking and ATM network. They will also have access to the FirstBank's ATM network with no service fees.

About First BanCorp

First BanCorp. is the parent corporation of FirstBank Puerto Rico, a state-chartered commercial bank with operations in Puerto Rico, the Virgin Islands and Florida, and of FirstBank Insurance Agency. First BanCorp. and FirstBank Puerto Rico operate within U.S. banking laws and regulations. The Corporation operates a total of 143 branches, stand-alone offices, and in-branch service centers throughout Puerto Rico, the U.S. and British Virgin Islands, and Florida. Among the subsidiaries of FirstBank Puerto Rico are First Federal Finance Corp., a small loan company; FirstBank Puerto Rico Securities, a broker-dealer subsidiary; First Management of Puerto Rico, a domestic corporation that holds tax-exempt assets; and SM Galeria Paseos SPV, LLC and FB Las Iguanas Holding Corporation, both real estate property management companies. In the U.S. Virgin Islands, FirstBank operates First Express, a small loan company. First BanCorp's shares of common stock trade on the New York Stock Exchange under the symbol FBP. Additional information about First BanCorp. may be found at www.firstbankpr.com.

First BanCorp
Iris González, 787-729-8130 or Cel. 939-630-6108
APR, Lic. R-67
Vice President
Marketing & Public Relations
iris.gonzalez@firstbankpr.com

Source: First BanCorp

First BanCorp: FirstBank Puerto Rico Announces Acquisition of 10 Doral Bank Branches in the Island