Puerto Rico’s governor on Wednesday again used a state of emergency decree to protect one of the island’s struggling public agencies from lawsuits and preserve dwindling liquidity as the U.S. Congress works on a bill to restructure the island’s $70 billion public debt.
The order allows Puerto Rico’s Highways and Transportation Authority to suspend the transfer of toll revenues to bondholders and imposes a stay on legal claims, Gov. Alejandro Garcia Padilla said. That will allow the government to pay contractors and avoid paralyzing safety and improvement projects, he said.
The agency, which runs and maintains the U.S. territory’s highways and bridges, has about $4 billion in debt and faces a $233 million bond payment in July that it expects to make.
Garcia said the order does not impose a moratorium on the agency’s debt payments, though government agencies have defaulted on an increasing number of multimillion-dollar bond payments.
An analysis released this week by the Center for the New Economy, a Puerto Rico-based think tank, says the island’s economy has shrunk 14 percent since 2006, while its population declined 9 percent and total employment dropped nearly 20 percent.
Garcia said the transportation agency needs nearly $25 million a month to operate and more than $150 million to pay contractors.
Last month, the agency reached a $115 million deal with a Spanish-based company that manages the island’s toll roads, agreeing to take a cut in revenue collections from 50 percent to 25 percent.
That prompted a lawsuit by bond insurer Ambac Financial Group seeking to block the deal due to concern it could undermine other claimants. Nader Tavakoli, Ambac’s CEO and president, said Wednesday that the company will oppose any bill that does not provide for consensual debt restructurings, among other things.
“We are disappointed that rather than doing everything it can to meet its financial obligations and negotiate in good faith with creditors for consensual solutions, the government, on the advice of bankruptcy advisers, is engaging in further machinations to advance its lobbying campaign ahead of congressional action,” he said.
Puerto Rico governor puts road agency under emergency decree
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