Puerto Rico fight over utility raises risk for bond insurers

When Puerto Rico struck a deal more than a year ago to cut the government electric company’s $9 billion debt, one group was spared the hit: bond insurers, whose guarantees the island needed to win back the faith of investors.

That agreement and the precedent it set are now at risk as Governor Ricardo Rossello threatens to use the bankruptcy-like powers the U.S. has since given the territory to seek additional concessions from MBIA and Assured Guaranty. That’s triggered a decline in bond insurers’ shares over speculation about the scale of the losses they face as Puerto Rico moves toward the bigger effort to slash its entire $70 billion debt.

“For an outsider coming in, like the governor, it probably doesn’t seem to him like the people of Puerto Rico got the best deal here,” said Chas Tyson, an analyst with Keefe, Bruyette & Woods.

The push to reopen the Puerto Rico Electric Power Authority’s December 2015 agreement -- the only one the island has reached -- marks an opening salvo in Rossello’s effort to pull the government out of a crisis that’s promising to impose deep losses on bondholders, who snapped up the territory’s high-yielding debt for years even as the economy contracted. Puerto Rico has already defaulted on a major swath of its debt and the fiscal recovery plan approved this month by U.S. financial overseers would cover less than a quarter of what it owes between 2018 and 2026, assuming the government can accomplish its goals of cutting spending and raising revenue.

Analysts say bond insurers have enough cash to weather their exposure to Puerto Rico and that’s reflected in the price of guaranteed commonwealth bonds, some of which trade for over 100 cents on the dollar.

But insurers’ shares have slid amid speculation the resolution will be more costly than previously anticipated. Since the end of January, MBIA has fallen 18 percent and Assured 5 percent, while Ambac Financial Group Inc., which also insures Puerto Rico debt, has declined 11 percent. The S&P 500 Index has gained nearly 4 percent over the same time.

The companies that insured the debt of the utility, known as Prepa, were set to avoid paying out claims under the deal. Owners of uninsured bonds, including Franklin Advisers Inc. and OppenheimerFunds Inc., agreed to accept 85 cents on the dollar by exchanging their securities for new debt backed by a share of residents’ electricity bills.

Instead of covering payments on the other debt they guaranteed, the insurers agreed to fund a $462 million surety bond that would backstop the securities -- providing investors with protection against a default. Assured and MBIA also purchased bonds from Prepa to provide the utility with cash needed to cover debt payments.

Prepa’s uninsured debt is trading around 60 cents, indicating creditors got a good deal relative to the market, said Tyson. “Every dollar that you don’t spend on debt service can be passed on to utility customers in the form of lower prices,” he said.

Rossello’s push has riled insurers and bondholders, who said it cast doubt on his ability to negotiate with other creditors and jeopardizes the government’s ability to return to the capital markets. If his administration can’t strike an agreement, Puerto Rico and the federal oversight board may turn to the courts to reduce what is owed, thanks to a provision included in a U.S. law passed last year to give the island tools to deal with its debt.

Puerto Rico is facing a deadline to reach out-of-court settlements with creditors by May 1, when a legal stay that’s sheltered it from the consequences of most lawsuits is set to lapse. The Prepa deal could also expire on Friday if it’s not extended, as insurers and bondholders have previously agreed to do.

The gulf between Rossello and Prepa’s creditors was on public display at a March 22 congressional hearing in Washington, where Adam Bergonzi, chief risk officer of MBIA’s National Public Finance Guarantee unit, said the governor has done little to reach out to creditors. An adviser to Franklin and Oppenheimer also questioned Rossello’s failure to close the deal. On Tuesday, U.S. Representative Doug LaMalfa, who heads the House panel that held the hearing, urged Rossello to complete the Prepa agreement by Friday’s deadline.

MBIA’s National insures $8.6 billion of principal and interest payments, including $1.8 billion of Prepa debt, and had $4.6 billion of claims-paying resources at the end of 2016, according to the company’s disclosures. Assured guarantees $8.1 billion of principal and interest payments, including $1.1 billion from the utility, and had $11.7 billion to meet claims as of Dec. 31.

Syncora Guarantee Inc., which is also a party to the Prepa deal, had only about $461 million of exposure to Puerto Rico as of Sept. 30. Ambac insures $9.7 billion of principal and interest, $7.3 billion of which comes due from 2047 to 2054, according to a filing. The company reported $8.8 billion of claims-paying resources as of Dec. 31. It doesn’t guarantee Prepa securities.

MBIA spokesman Greg Diamond, Assured Guaranty spokeswoman Ashweeta Durani and Syncora spokeswoman R. Sharon Smith declined to comment. An e-mail and phone message seeking comment from Ambac weren’t returned.

Puerto Rico’s move to extract concessions from the insurance companies may be short-sighted, said Mark Palmer, managing director at BTIG. He said the island may need the companies to guarantee its bonds whenever it wants to resume borrowing for public works, given that investors may be worried that it would default again if the economy doesn’t turn around.

“It makes sense to use insurance where the investors are really taking risks on the insurer and not the municipality,” he said.

The conflict between Puerto Rico and the utility creditors is unlikely to be resolved outside a broad agreement to restructure all of the island’s debts, said Tyson, the analyst with Keefe, Bruyette.

“There’s a pretty wide distance between the governor, the oversight board and the major creditors of Prepa,” he said.

Martin Z. Braun and Jordyn Holman

Puerto Rico fight over utility raises risk for bond insurers

Restoring Puerto Rico

Alexander Hamilton was the founding father that perhaps most influenced the tenets of the American economy. Hamilton’s brilliance is that he realized the economic success of any government depended upon its ability to access capital markets and respect for the rule of law. The framers of the Commonwealth’s Constitution understood this as well, and provided that payment of general obligation debt receive priority over any other debt incurred by the Commonwealth. Yet today, neither the Commonwealth nor the Oversight Control Board appear to be heeding Hamilton’s wisdom nor its Constitution, much to the detriment of the people of Puerto Rico.

For years, Puerto Rico has faced a mounting fiscal crisis as a result of its overspending and indebtedness. This culminated last year when the Commonwealth defaulted on $75 billion of debt, including debt that is protected under its Constitution. When the then-governor upended the rule of law by defaulting on Puerto Rico’s Constitutional debt, he triggered an economic freefall for the Commonwealth. By subsequently seeking to restructure its Constitutional debt – something no state has the legal authority to do - he further damaged Puerto Rico’s reputation.

As governor of New York, I inherited many of the same problems Puerto Rico faces today. Specifically, New York faced massive deficits resulting from bloated budgets, falling credit ratings that led to decreased market access, and an overall lack of transparency and credibility that stifled investment and stymied growth. We had to enhance the credit rating of the state and provide the private sector with the confidence that New York State was a place to invest. So we got to work balancing budgets, cutting taxes, reducing spending and instilling both a commitment to accountability and respect for the rule of law. The result; our budgets were balanced, our credit rating increased three times, New York’s economy grew, and hundreds of thousands of jobs were created.

I believe Puerto Rico, led by Gov. Ricardo Rossello, can accomplish the same type of fiscal rebirth New York experienced during my governorship. To do this, Gov. Rossello should embrace three things: 1) that the only long-term solution to Puerto Rico’s financial difficulty lies in economic growth; 2) that to achieve this growth Puerto Rico must have an economic and legal environment that encourages private sector investment; and 3) and an acknowledgement that a failure to honor the Constitution of Puerto Rico by not prioritizing its general obligation creditors will destroy potential investor confidence and make growth much more difficult to achieve.

In his campaign last year, Rossello pledged to adhere to these principles. He promised policies guided by the rule of law and a commitment to fiscal discipline and transparency. He also committed to good faith adherence to Congressional oversight, which includes language that expressly compels the Commonwealth to respect the legal obligations made to bondholders in the Puerto Rican Constitution.

Unfortunately, the initial steps of the oversight board and new administration fall dramatically short of their pledges. Instead of prioritizing repayment of the Commonwealth’s general obligation debt, as mandated by the Puerto Rico Constitution and the law underpinning PROMESA, the governor’s plan calls for less than $1 billion per year in debt service payments - even though revenues are forecast to exceed $18 billion. The plan does not even attempt the respect the first priority afforded the Commonwealth’s general obligation debt – it in fact treats it as the last priority receiving whatever is left. Moreover, the plan avoids tackling many of the Commonwealth’s nagging systemic issues such as structural reforms and spending reductions while accepting the premise of economic decline over the next 10 years.

The simple fact is that the savings of the Commonwealth/Oversight Board’s fiscal plan comes primarily by dishonoring the Constitutional commitments of Puerto Rico. Unlike previous draft plans offered by the Rossello administration, the fiscal plan that was certified by the Oversight Board falls far short of restoring the Island’s credibility. This plan seems designed to force the Commonwealth into a court-supervised debt restructuring rather than a consensual negotiation with its bondholders. Good faith negotiations with creditors is the only pathway for future investment and growth for the people of Puerto Rico. For his part, Rossello must not hesitate to stand up to the Oversight Board and prioritize the rule of law for the sake of future economic prosperity.

New York and Puerto Rico have always had a special relationship, and I was honored during my time as governor to work with the Commonwealth’s leaders from both parties on issues of mutual interest to our citizens. Today, I’m equally committed to the future growth and prosperity of the Commonwealth, and as a homeowner there, I am personally invested in its success. Violating the Constitution and ignoring PROMESA’s requirements is not a remedy for future success but rather a guarantee for continued decline.

“...what is the most sacred duty and the greatest source of our security in a Republic? The answer would be: An inviolable respect for the Constitution and Laws”

- Alexander Hamilton

Pataki served as governor of New York from 1995-2006. He is an advisor to the Ad Hoc Group of Puerto Rico's General Obligation (GO) Bondholders.

Alexander Hamilton

“[s]tates, like individuals, who observe their engagement (pay off their debts) are respected and trusted, while the reverse is the fate of those who pursue an opposite conduct;”



Restoring Puerto Rico

Puerto Rico's major bondholders critical of fiscal turnaround plan

Groups of Puerto Rico's creditors issued a rare joint letter late on Monday opposing a plan designed to steer the island out of financial crisis, stoking friction between the U.S. territory, its investors and the board tasked with managing its finances.

In a letter to the federally appointed oversight board, creditors with exposure to $12 billion in Puerto Rican debt said the turnaround plan, approved by the board on March 13, violates the Puerto Rico financial rescue law known as PROMESA by ignoring legal protections on some public debt.

The letter was signed by holders of constitutionally guaranteed general obligation (GO) debt; a group holding junior COFINA debt backed by sales tax revenue; and Assured Guaranty Corp, which insures $3.4 billion of Puerto Rican bonds.

Lawyers representing the UBS Family of Funds and the Puerto Rico Family of Funds said on Tuesday that their clients, who hold roughly $652 million in accreted value of COFINA bonds, "strongly share and support many of the objections and concerns" stated in the bondholders' letter to the oversight board.

The plan “simply ignores one of the enumerated requirements that Congress imposed” under PROMESA, “namely, that it respect the relative lawful priorities” of debt, the letter said.

With Puerto Rico trying to restructure its debt before the May 1 expiration of PROMESA’s freeze on litigation, the letter illustrates a wide gulf between both sides.

Although Puerto Rico's relationship with bondholders has always been rocky, Monday’s letter also pits creditors against the oversight board, a bipartisan group appointed last year to help facilitate restructuring talks and oversee the island’s finances.

Attempts by Reuters to reach representatives of the oversight board for comment were unsuccessful.

Puerto Rico faces $70 billion in debt, a 45 percent poverty rate and rampant emigration. The turnaround plan green-lighted by the board contemplates only $800 million a year to pay debt — a fraction of what the island owes — even after imposing strict austerity measures.

In Monday’s letter, creditors said the plan runs afoul of PROMESA by prioritizing government services ahead of general obligation debt in violation of the island’s constitution. COFINA creditors said it would also unlawfully transfer sales tax revenue, on which they have a lien, into the island’s general fund.

The plan “contains many unexplained numbers and assumptions that creditors need to understand before meaningful negotiations can occur,” the stakeholders said. They added that the plan will “undermine” Puerto Rico’s efforts to regain access to capital markets.

Senior COFINA debt carrying a 5.25 percent coupon that matures in 2057 was bid at 63.5 with a yield of 8.45 percent on Tuesday, down from Monday's bid price of 63.69. 74529JAR6=MSRB, according to Thomson Reuters data.

The 6 percent 2042 subordinated COFINA bond traded off its highs of the day to 42.43, but up from Monday’s last bid of 41.11, yielding 14.695 percent, according to Thomson Reuters data.

After the plan's approval, Puerto Rico’s benchmark 8 percent 2035 GO bond plunged nearly 10 full points to a bid of 63. The bond, in default, has not traded since March 22.

(Reporting By Nick Brown and Daniel Bases; Editing by Dan Grebler and Tom Brown)
By Nick Brown and Daniel Bases
Puerto Rico's major bondholders critical of fiscal turnaround plan

Congressman Says Puerto Rico Should Honor Prepa Restructuring Deal

A U.S. lawmaker Tuesday urged Puerto Rico Governor Ricardo Rossello to honor a $9 billion debt restructuring agreement tied to the island’s public electric monopoly, a deal that the governor says needs to be renegotiated.

By ANDREW SCURRIA

Puerto Rico Governor Ricardo Rossello has called for a renegotiation of the $9 billion agreement

Congressman Says Puerto Rico Should Honor Prepa Restructuring Deal

Puerto Rico's major bondholders critical of fiscal turnaround plan

Groups of Puerto Rico's creditors issued a rare joint letter late on Monday opposing a plan designed to steer the island out of financial crisis, stoking friction between the U.S. territory, its investors and the board tasked with managing its finances.

In a letter to the federally appointed oversight board, creditors with exposure to $12 billion in Puerto Rican debt said the turnaround plan, approved by the board on March 13, violates the Puerto Rico financial rescue law known as PROMESA by ignoring legal protections on some public debt.

The letter was signed by holders of constitutionally guaranteed general obligation (GO) debt; a group holding junior COFINA debt backed by sales tax revenue; and Assured Guaranty Corp, which insures $3.4 billion of Puerto Rican bonds.

Lawyers representing the UBS Family of Funds and the Puerto Rico Family of Funds said on Tuesday that their clients, who hold roughly $652 million in accreted value of COFINA bonds, "strongly share and support many of the objections and concerns" stated in the bondholders' letter to the oversight board.

The plan “simply ignores one of the enumerated requirements that Congress imposed” under PROMESA, “namely, that it respect the relative lawful priorities” of debt, the letter said.

With Puerto Rico trying to restructure its debt before the May 1 expiration of PROMESA’s freeze on litigation, the letter illustrates a wide gulf between both sides.

Although Puerto Rico's relationship with bondholders has always been rocky, Monday’s letter also pits creditors against the oversight board, a bipartisan group appointed last year to help facilitate restructuring talks and oversee the island’s finances.

Attempts by Reuters to reach representatives of the oversight board for comment were unsuccessful.

Puerto Rico faces $70 billion in debt, a 45 percent poverty rate and rampant emigration. The turnaround plan green-lighted by the board contemplates only $800 million a year to pay debt — a fraction of what the island owes — even after imposing strict austerity measures.

In Monday’s letter, creditors said the plan runs afoul of PROMESA by prioritizing government services ahead of general obligation debt in violation of the island’s constitution. COFINA creditors said it would also unlawfully transfer sales tax revenue, on which they have a lien, into the island’s general fund.

The plan “contains many unexplained numbers and assumptions that creditors need to understand before meaningful negotiations can occur,” the stakeholders said. They added that the plan will “undermine” Puerto Rico’s efforts to regain access to capital markets.

Senior COFINA debt carrying a 5.25 percent coupon that matures in 2057 was bid at 63.5 with a yield of 8.45 percent on Tuesday, down from Monday's bid price of 63.69. 74529JAR6=MSRB, according to Thomson Reuters data.

The 6 percent 2042 subordinated COFINA bond traded off its highs of the day to 42.43, but up from Monday’s last bid of 41.11, yielding 14.695 percent, according to Thomson Reuters data.

After the plan's approval, Puerto Rico’s benchmark 8 percent 2035 GO bond plunged nearly 10 full points to a bid of 63. The bond, in default, has not traded since March 22.

(Reporting By Nick Brown and Daniel Bases; Editing by Dan Grebler and Tom Brown)
By Nick Brown and Daniel Bases 
Puerto Rico's major bondholders critical of fiscal turnaround plan

Frontier Airlines adds Puerto Rico to its route map

Frontier Airlines is adding Puerto Rico to its route map.

The carrier will launch service to San Juan on June 11, offering nonstop flights from both Philadelphia and Orlando.

The new Puerto Rico flights also continue Frontier’s expansion in both Philadelphia and Orlando. Once the San Juan flights start, Frontier will be flying to 18 non-stop destinations from Philadelphia. From Orlando, Frontier’s schedule will grow to include non-stop service to 25 destinations.

Ben Mutzabaugh 
Frontier Airlines adds Puerto Rico to its route map

Ukraine ex-finance minister to oversee Puerto Rico crisis

 " A federal control board overseeing Puerto Rico's finances amid a dire economic crisis announced Thursday that it appointed Ukraine's former finance minister as its executive director.

The board's chairman said Natalie Jaresko served during a critical time in Ukraine's history from 2014 to 2016 as it faced a deep recession.

"Ukraine's situation three years ago_like Puerto Rico's today_was near catastrophic, but she worked with stakeholders to bring needed reforms that restored confidence, economic vitality and reinvestment in the country and its citizens. That's exactly what Puerto Rico needs today," said chairman Jose Carrion.

He said Jaresko was born in Chicago to Ukrainian immigrants and was chosen out of a group more than 300 candidates during a four-month search. She previously worked in various economic positions at the U.S. State Department and also co-founded private equity fund manager Horizon Capital, where she served as CEO. As Ukraine's finance minister, she maintained a strong reputation with Western governments and investors and helped negotiate a deal to restructure the country's $15 billion debt after its economy contract by nearly 18 percent in the first quarter of 2015.

Jaresko said in a statement that she will pursue a decisive and successful recovery for Puerto Rico.

"I realize this goal may seem daunting if not impossible to many, but I accepted this position because I am optimistic we can achieve it together," she said.

Jaresko will be paid $625,000 a year, an amount Carrion acknowledged would likely cause an outcry on an island mired in a decade-long economic slump and seeking to restructure some $70 billion in public debt. He said Jaresko will commute from the Ukraine once a month until June, with all flights and hotel stays to be paid for by Puerto Rico's government.

Carrion said Jaresko will be responsible for ensuring that Puerto Rico achieves a balanced budget within four years and is granted re-entry into the capital market after credit rating agencies downgraded the island's debt to junk status.

"She dealt with an extremely challenging economic situation that is very, very similar to the situation she's confronting in Puerto Rico," Carrion told reporters during a conference call.

He said Jaresko also will make sure that federal funds slated for Puerto Rico are administered correctly: "We have a credibility problem in Washington," he said.

The board was created last year by U.S. Congress and recently approved a 10-year fiscal plan for Puerto Rico that contains numerous austerity measures.

Ukraine ex-finance minister to oversee Puerto Rico crisis

Puerto Rico's Sole Deal With Bondholders in Jeopardy

The sole tentative debt restructuring deal that Puerto Rico reached after two years of negotiations is in jeopardy after federal control board officials said they would support the U.S. territory's push to amend the agreement.

Many believe changes to the deal could mean a deeper cut for investors who bought bonds issued by the island's troubled public power company, which has a total debt of $9 billion.

Gov. Ricardo Rossello told a U.S. congressional hearing that the deal made by the previous administration did not call for significant concessions from certain creditors and might affect the utility's ability to update its aging infrastructure and offer more affordable rates, among other things.

"The goal is to be able to deliver reliable energy at sustainable rates to the people and businesses of Puerto Rico," he said. "That vision includes a successful restructuring of" the power company.

Members of a federal control board that oversees the Puerto Rican government's finances said they would back changes made to the 15-month-old deal, which expires March 31. Rossello requested the deadline be extended to May 1, the same day an overall stay on lawsuits filed by creditors is to expire amid multimillion-dollar defaults by Puerto Rico's government.

Rossello's comments sparked concern among bondholders who already agreed to a 15 percent cut, among other things. Stephen Spencer, with the Los Angeles-based investment bank Houlihan Lokey, an adviser to bondholders, said he was concerned about the deal falling apart.

"The government wants to jam us into pay-nothing bonds," he said. "Without a deal, [the power company] faces either a liquidity crisis or a large, immediate rate hike."

Power bills in Puerto Rico are already on average twice those of the U.S. mainland, which has long spooked potential investors and led to a growing number of unpaid bills on an island whose political leaders are seeking to restructure some $70 billion in public debt.

Others echoed the governor's message, including the Association of Industries of Puerto Rico.

The debt agreement "is a punitive proposal for power customers who will have to pay higher rates under a deal that preserves the power company's monopoly while blocking competition from the private sector and alternative energy," it said.

If the current deal is upheld, bondholders who bought the utility's debt would likely face fewer losses than those who bought bonds issued by other Puerto Rico government agencies. Rossello told U.S. legislators that he prefers to try to reach a new deal with the power company's bondholders before opting for a restructuring process similar to bankruptcy.

Danica Coto
Puerto Rico's Sole Deal With Bondholders in Jeopardy

Puerto Rico Religious Leaders Ask Congress to Pass Debt Crisis Actions

"‎As religious leaders in Puerto Rico, we urge you to act on behalf of the 3.4 million American citizens living on the island," wrote two prominent ministers to Congress about ‎policies to help the debt-troubled island.

"‎As religious leaders in Puerto Rico, we urge you to act on behalf of the 3.4 million American citizens living on the island," wrote two prominent ministers to Congress about ‎policies to help the debt-troubled island. Archbishop Roberto González Nieves and Bible Society leader Reverend Heriberto Martínez-Rivera want Congress to adopt health care and child tax benefit recommendations proposed by the bipartisan Congressional Task Force on Economic Growth in Puerto Rico.

"Our people are suffering," the religious leaders write in a letter sent to Congress. "Nearly 60% of our children live in poverty and thousands of our brothers and sisters flee to the US mainland each year in search of work, tearing apart families and communities."

The Congressional task force estimates that extending the Child Tax Credit would generate roughly $3 billion for the island's economy. Congress created this task force as part of the Puerto Rico Oversight, Management and Economic Stability Act, or PROMESA, which passed to address the financial crisis last June.

"I'm grateful that Congressional leadership supports these recommendations," stated Jubilee USA director Eric LeCompte, who advises the religious leaders on Puerto Rico's debt crisis. LeCompte testified to Congress and the oversight board on solving the crisis. "Congress needs to follow through on its part to resolve the crisis."

On March 13th, the Financial Oversight and Management Board of Puerto Rico, also created by PROMESA, approved the latest fiscal plan presented by the island's Governor. The approved plan enables Puerto Rico to pursue debt restructuring negotiations with the island's creditors. The oversight board predicts that Puerto Rico must make deep debt cuts as high as 80% to resolve the crisis. A halt on debt lawsuits against Puerto Rico ends in May.

"In your important work in addressing the island's financial and developing humanitarian crisis, we pray you will weigh any decision that you make in light of how it impacts our children and the children of future generations," González and Martínez write in their letter to Congress. "These children played no role in creating this crisis but stand to lose the most if we do not resolve it. ‎"

Jubilee USA Network is an alliance of more than 75 US organizations and 650 faith communities working with 50 Jubilee global partners. Jubilee USA builds an economy that serves, protects and promotes the participation of the most vulnerable. Jubilee USA wins critical global financial reforms and won more than $130 billion in debt relief to benefit the world's poorest people. http://www.jubileeusa.org 

https://d3n8a8pro7vhmx.cloudfront.net/jubi...

Puerto Rico Religious Leaders Ask Congress to Pass Debt Crisis Actions

Puerto Rico Governor Hopeful About Turnaround Plan [Video]

Puerto Rico Governor Ricardo Rossello discusses the federal oversight board's approval of a financial recovery plan that will cover less than a quarter of the debt payments coming due, underscoring the deep concessions the island plans to seek from investors. He speaks with Bloomberg’s Kevin Cirilli on "Bloomberg Markets." (Source: Bloomberg)

Puerto Rico Governor Hopeful About Turnaround Plan

Puerto Rico oversight board approves revised government turnaround plan

Puerto Rico’s federal oversight board voted unanimously on Monday to certify the government's fiscal turnaround plan, on the condition it be amended to eliminate Christmas bonuses, impose employee furloughs, and further reduce pension spending.

The plan, a cornerstone of the federal Puerto Rico rescue law known as PROMESA, will serve as the baseline for looming restructuring talks with holders of some $70 billion in debt that has pushed the U.S. territory to the brink of economic collapse.

The government can avoid some of the austerity measures, which have sparked protest among Puerto Ricans, if it presents alternative cost-saving measures by April 30, the board said.

PROMESA required Governor Ricardo Rossello to present a turnaround blueprint that would require sign-off by the board. The board rejected an initial draft last week, saying it relied on "overly optimistic" economic projections.

The latest version rolled back those numbers, boosting the island's 10-year projected funding gap to $67 billion from $56 billion, and contemplating $39.6 billion in new cash flows from spending cuts and revenue initiatives, up from $33.8 billion in the last plan.

The new version forecasts the island would have $800 million a year to service debt, down from $1.2 billion in the draft. "The new plan is modestly worse than the old plan for creditors, as it implies larger haircuts," Puerto Rico credit analyst Chas Tyson, of KBW Inc, said in a note on Monday.

Approval by the board came with conditions: the government must reduce pension spending by 10 percent beginning in 2020, cut Christmas bonuses and implement employee furloughs as soon as July 1 to stave off a short-term cash crunch.

AUSTERITY PUSH DRAWS PROTESTS

The austerity push drew protests outside the meeting in lower Manhattan on Monday, including from teachers who claimed the furloughs would shorten the public school year by the equivalent of two months a year.

The government can avoid the furloughs and bonus cuts if it presents the board with a plan by April 30 to shore up liquidity by $200 million. Rossello said he was confident the cuts would not be necessary.

"I’m very confident we’ll have $200 million in reserve cash, so that we can jump over that obstacle," Rossello said in an interview with Reuters after Monday's meeting.

The board said it will negotiate over the next 30 days with the government on how to cut pensions, a contentious issue on an island where retirement systems are already borderline insolvent thanks to decades of mismanagement by governments that routinely made overly generous promises to workers.

"All stakeholders have been forced to sacrifice, and no one is exempt from that," board member Andrew Biggs, a pension expert, told reporters after the meeting. He added the cuts will be orchestrated “in a way that would spare the lowest-income people from any reductions.”

Rossello said he will not pass public policy that would hurt the poorest pensioners. "I don’t see any way I can reduce pensions of people already having a hard time getting medications and things."

In another controversial move, the board said it supported government efforts to seek additional concessions from bondholders of Puerto Rico’s power utility, PREPA, which is more than $8 billion in debt.

The utility and its creditors have had a tentative restructuring in place for more than a year, but Rossello’s administration has said it would seek new terms, sparking concern and frustration among PREPA’s creditors.

A subcommittee of the U.S. House Committee on Natural Resources announced it will hold a hearing on March 22 on the status of the PREPA deal, the current version of which sees creditors taking 15-percent cuts.

(Reporting By Nick Brown; Editing by Daniel Bases and Diane Craft)

By Nick Brown

Governor Ricardo Rossello (L) talks with reporters after a speech in San Juan, Puerto Rico, March 9, 2017. REUTERS/Nick Brown
Puerto Rico oversight board approves revised government turnaround plan

Puerto Rico governor says he wants to improve, not 'destroy,' PREPA restructuring

Puerto Rico Governor Ricardo Rossello said on Monday he does not want to "destroy" the pending debt restructuring deal for the island's ailing power utility, but wants to "get a better one" as the U.S. territory's fiscal situation worsens.

Rossello said in an interview that he was invited to Washington for a U.S. congressional hearing on March 22 to discuss the fate of Puerto Rico Electric Power Authority, also known as PREPA.

The new governor said he is aware that his unwillingness to rubber-stamp the existing deal, whereby PREPA’s creditors would take a 15 percent cut on their $8 billion in debt, has vexed stakeholders who thought they were close to a resolution.

But Puerto Rico’s financial picture has deteriorated since the deal was first struck, the governor said, adding that he is willing to renegotiate within the existing framework.

"If I didn't care, I would have just blown the deal up," Rossello told Reuters. "I'm not here to destroy a deal, I'm here to get a better one, based on the reality that things have changed."

PREPA's fate is one of the most contentious issues on an island facing $70 billion in debt. It was a focal point at Monday's public meeting in New York of the island’s federally appointed financial oversight board.

During the meeting, the oversight board approved Rossello’s revised blueprint to steer the island out of economic crisis.

The board voiced support for Rossello’s efforts to extract deeper concessions from PREPA creditors. They have grumbled privately that his opposition to the deal is political since it dates back more than a year to his predecessor’s time in office.

The U.S. House Committee on Natural Resources said it would hold a hearing on the status of the deal.

Rossello said he "received an invitation" to the hearing. "I’ll be there," he said, but would not say if he had been subpoenaed.
By Nick Brow
Puerto Rico governor says he wants to improve, not 'destroy,' PREPA restructuring

Puerto Rico, Mired in Debt, Has a New Rescue Plan

Puerto Rico, reeling from a debt crisis lasting more than a year, reached an agreement Monday that should set the stage for meaningful talks with its creditors, who hold more than $70 billion of defaulted debt.

Under the agreement, new taxes will be imposed but public workers will be spared from furloughs for now, a measure that had been on the table.

The island’s federally appointed oversight board voted unanimously to approve an amended plan, submitted by Gov. Ricardo Rosselló, for restoring fiscal solvency over the next 10 years. Approving the governor’s plan spared the seven-member board from having to impose an austerity plan that probably would have caused an outcry on the island.

“It’s essentially the same plan I submitted, except for the economic baseline numbers,” Mr. Rosselló said in a telephone interview after the meeting. “The board approved our plan, conditioned on us meeting some milestones.”

By MARY WILLIAMS WALSH
Puerto Rico, Mired in Debt, Has a New Rescue Plan

International Women’s Day Latest: Poland’s women show the government red cards

Philadelphia • The Latest on International Women's Day events (all times local):

2:45 p.m.

Thousands of women in Warsaw showed Poland's conservative government red cards and made noise with kitchenware to demand full birth control rights, respect and higher pay.

The protest Wednesday was part of global Women's Day in demand of equal rights. Similar protests were held in some 80 cities and town in Poland.

Hollywood actress Jessica Chastain joined one of Warsaw's protests early Wednesday.

The nation's government promotes Catholic values and has taken steps to fully ban abortion, but had to back down last year under massive women's protests.

Thousands of women, including popular actresses, models and politicians gathered in downtown Warsaw with frying pans, ladles and red cards to make their discontent clear to the government.

They demanded full birth control rights, pay equal with men, protection against violence.

———

2:30 p.m.

Hundreds of women dressed in red and holding signs with photos of their local lawmakers are gathering at the Utah state capitol for a Day Without a Woman protest to remind legislators they're closely watching how they handle women's issues.

Crowds of women stood outside both the state's House and Senate on Wednesday to send notes to lawmakers asking them to come out to talk with them.

Salt Lake City resident Chelsi Archibald says she skipped work at her marketing job to attend the event and send a note to Republican Sen. Todd Weiler, urging his support of the Equal Rights Amendment.

The Salt Lake City event is part of a national effort by the organizers of the January Women's March who have called for women to take the day off to show their impact on American society.

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2:15 p.m.

More than 20 Democratic women lawmakers have walked out of the Capitol in the early afternoon to speak to several hundred spectators who have gathered as part of a Day Without a Woman protests in the U.S.

The lawmakers are dressed in red, as are many of the people cheering them on.

The lawmakers are criticizing efforts to repeal the Affordable Care Act and eliminate federal funding for Planned Parenthood. They are also demanding equal justice under the law and that women receive pay that's on par with what men receive for performing similar work.

Rep. Barbara Lee, D-Calif., has begun a series of speeches from women lawmakers, saying: "We are resisting President Trump and congressional Republicans and letting them know we will not go back."

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2 p.m.

The White House says none of its female staffers skipped work in support of International Women's Day.

Spokesman Sean Spicer says everyone has "shown up" and is working hard to advance President Donald Trump's agenda.

Spicer adds that the administration recognizes the contributions women make to businesses, their families, the economy and society. He says people have the right to express themselves but that women's contributions should be recognized 365 days a year.

Spicer says hopefully the administration can help change that.

Women around the country are marking International Women's Day by skipping work, avoiding shopping and attending rallies, including one near the White House.

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1:45 p.m.

Melania Trump is hosting a luncheon on International Women's Day. It's her first solo White House event as first lady.

The first lady on Wednesday welcomed about 50 women seated at tables adorned with floral centerpieces of pharaoh tulips and sweet pea flowers in shades of purple.

Attendees included her stepdaughter, Ivanka Trump; Vice President Mike Pence's wife, Karen; White House counselor Kellyanne Conway; and Education Secretary Betsy DeVos.

Reporters were led out of the room as the first lady began to speak.

She and President Donald Trump were having dinner later Wednesday with Sen. Ted Cruz, R-Texas, and his wife, Heidi.

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1:10 p.m.

Hundreds of Italian women, with some men, too, have set off in a march from Rome's Colosseum to demand more respect.

Wearing pink wigs, scarves or headbands, they gathered Wednesday evening by the ancient Rome arena. Among their demands: equal pay for the same work men do, and more executive positions in the corporate world.

Statistics show less than half of Italian women work. Many say they are forced to stay home with small children because of a shortage of affordable day care, including public nurseries.

Two women held a poster reading: "Not like a doll," riffing off of the lyrics "like you were a doll" from a well-known pop song in Italy. Sexy models of women in revealing clothes are commonly used in Italian advertisements.

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10 a.m.

The U.N. secretary general says the effective way to protect the rights of women is by prioritizing the empowerment of women.

Antonio Guterres, speaking in Nairobi where he is in an official visit, said Wednesday priority should be given for the "full presence of women" in government institutions, political systems, and business among other aspects of society.

Guterres says with the full presence of women in society development will be stronger, peace will be easier to maintain, human rights will also be better protected.

He says in his past posting as U.N. high commissioner for refugees he saw suffering of women in the most tragic circumstances that one can imagine.

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9:50 a.m.

Showing support on the International Women's Day, hundreds have joined a protest by women in tiny Montenegro against cuts in state aid for mothers of three or more children.

Financial help for some 21,500 women in Montenegro — a country of 620,000 people — has been slashed by 25 percent amid efforts to tighten public spending. About half of the women on the list are jobless.

Montenegrin women have been protesting for days demanding that the government decision be reversed. Protesters on Wednesday blocked traffic outside the parliament building in downtown Podgorica, the capital, shouting "thieves."

Montenegro's economy has been weak despite recent progress in the Balkan country's efforts at joining NATO and the European Union.

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9:45 a.m.

In Puerto Rico, more than 100 women clad in purple T-shirts blocked one of the island's main highways as they linked arms and marched through the capital of San Juan at dawn.

The group clutched large purple flags emblazoned with the female symbol and used bull horns to decry chauvinism and demand more reproductive rights, among other things as nearby drivers honked in support Wednesday on International Women's Day.

Other activities are planned throughout the day in the U.S. territory.

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9:30 a.m.

Dozens of women lay on the ground and read out the names of women killed by their partners in Romania to draw attention to their plight on International Women's Day.

Women gathered in front of the justice ministry Wednesday in an event called "One fall, we all fall." The women then lay on the ground, to symbolize the deaths, and read out loud the details of 37 women, between the ages of 16 and 66, who have been slain. They then placed a tulip for each woman killed on the ground, in front of the ministry.

Some of the women had been strangled, another was shot with a hunting rifle, while others were beaten or fatally stabbed.

Carmen Gheorghe, an organizer, said some 70 women are slain by their partners each year in Romania.

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9 a.m.

Women across Poland are staging rallies and marches to demand equal rights, respect and protection against violence.

Hollywood actress Jessica Chastain took part in a protest walk across the street in downtown Warsaw. She was in the city for a gala screening of her latest movie "The Zookeeper's Wife."

Hundreds of women also gathered in front of the offices of the head of the ruling conservative party, Jaroslaw Kaczynski, who is Poland's most powerful politician. The government promotes Catholic values and is trying to ban abortion.

The women demanded "flowers, respect, rights."

They were later to march through Warsaw.

Protests were also held in dozens of other cities in Poland.

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8:45 a.m.

About 200 people gathered Wednesday in Madrid's central Puerta del Sol to mark International Women's Day and support a group of women who, a day earlier, ended a hunger strike to demand politicians' action against domestic violence.

Rights organizations had called for women to dress in black outfits and stop working, studying, consuming or taking care of others in order to show what would happen if women disappeared, a worldwide initiative launched under the slogan "Not One Woman Less."

Activist Gloria Vazquez represents Velaluz Association, whose members decided Tuesday to end a 26-day hunger strike after receiving enough assurances from lawmakers and officials to address their demands, which include better protection for victims of domestic violence.

In 2016, 44 women died in Spain in the hands of their partners or former partners. At least 16 women have been murdered so far in 2017.

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8:30 a.m.

In Manila, Philippines, hundreds of activists from left-wing women's groups protested Wednesday at the U.S. Embassy, where they burned a mock U.S. flag with President Donald Trump's image, before joining a bigger rally outside the presidential palace.

In both rallies, they demanded an end to the presence of visiting U.S. troops and a crackdown against illegal drugs by President Rodrigo Duterte that has left thousands of drug suspects dead.

The protesters hit a huge paper mask made in the likeness of Duterte as they ranted against an array of issues, including a lack of jobs, poverty, violence against women and the approval on Tuesday by the House of Representatives of a bill to re-impose the death penalty for drug offenses.

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8 a.m.

Russian Prime Minister Dmitry Medvedev (dih-MEE'-tree med-VYEH'-dyev) has approved a five-year national action plan supporting women's interests.

The signing came on International Women's Day on Wednesday.

Valentina Matvienko, who as speaker of the upper house of parliament is one of Russia's most prominent female politicians, calls the strategy a "gift to all the women of Russia."

The plan sets out broad terms for improving women's health, their economic opportunities and their involvement in the country's politics.

Meanwhile, Russian news reports say seven women have been arrested after a demonstration on Moscow's Red Square marking International Women's Day.

The independent newspaper Novaya Gazeta said those arrested included four activists, two of the newspaper's reporters and a photographer.

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7:30 a.m.

Germany airline Lufthansa says six all-female crews are flying in support of International Women's Day and to try and drum up interest in the industry among more women.

Lufthansa said 12 female pilots on Wednesday are flying passengers from Frankfurt, Munich, Duesseldorf, Zurich, Vienna and Brussels to Berlin.

Only six percent of the pilots in the Lufthansa Group currently are women, but Lufthansa's working to increase that number. Around 80 percent of cabin staff are female.

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7:10 a.m.

Sweden's women's football team marked International Women's Day by replacing the names on the back of their jersey's with tweets from Swedish women "who have struggled to gain ground in their respective field."

The team that grabbed silver at the 2016 Olympics on Wednesday wore the blue and yellow soccer jerseys with tweets by leading Swedes — including feminist Gudrun Schyman, singer Zara Larsson and rapper Silvana Imam — instead of the players' names at a Algarve Cup 2017 tournament in Portugal.

Swedish Football Association spokesman Niklas Bodell said the initiative "is first and foremost about showing the power in togetherness."

He said "the initiative (hash)InYourName is meant to live on."

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7 a.m.

President Donald Trump is taking note of Wednesday's U.N.-designated International Women's Day, and asking his Twitter followers to join him in "honoring the critical role of women" in the United States and around the world.

Trump tweets that he has "tremendous respect for women and the many roles they serve that are vital to the fabric of our society and our economy."

Organizers of the massive women's march in Washington the day after Trump's inauguration are urging women to take the day off and not spend money as a way of demonstrating their economic strength and impact on American society.

"A Day Without a Woman" marks organizers' first major action since the nationwide marches on Jan. 21 that drew millions of participants in protest against misogyny, inequality and oppression.

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6:45 a.m.

Finland — the first country in the world to grant women political rights — will later this year create a $160,000 (150,000-euro) International Gender Equality Prize that will be given to "a dedicated defender and builder of equality."

Prime Minister Juha Sipila says the award, given every other year, is the first of its kind in the world.

Sipila announced it Wednesday to coincide with celebrations of Finland's 100 years of independence and the International Women's Day.

Finnish women were the first in Europe to win voting rights in 1906. The Nordic nation of 5.5 million is a strong advocate for women's rights and is seen one of the most egalitarian societies in the world along with its Scandinavian neighbors.

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6:15 a.m.

The leaders of Cyprus' Christian and Muslim faithful are pledging to work with authorities and help end violence against women and girls on the ethnically divided island.

The heads of Cyprus' Muslim, Orthodox, Armenian and Maronite Christian communities, issued a first-ever joint statement on International Women's Day Wednesday to condemn violence targeting women and girls.

Stating that Christianity and Islam condemn violence against women, the leaders said it is their religious duty to stand united against it. They also rejected the "misuse of religion to vindicate" violence against women and girls.

They expressed concern that violence continues to be "one of the most pervasive manifestations of discrimination" against women in Cyprus.

Researchers said almost one in three women have experienced some form of violence since the age of 15.

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5:40 a.m.

Some 200 women gathered for a march to mark International Women's Day in Tokyo, protesting against low wages, long hours and other obstacles that make their lives difficult.

Participants, many of them members of women's groups and labor unions, chanted "It's hard to be a woman, and our patience is running out!" and held up placards and banners saying "Let's change our future!"

Japan lags behind most other industrial countries in women's participation and advancement in business, academics and politics. Prime Minister Shinzo Abe's "womenomics" policy aims to put more women to work to counter a chronically low birth rate and shrinking workforce, but a business culture in which long hours are routine makes it more difficult for women to get ahead.

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4:50 a.m.

The president of the European Parliament has used the occasion of International Women's Day to promise that a Polish lawmaker will be punished for the crude, sexist comments he made last week.

EU parliament President Antonio Tajani said that he intends to bring a "swift conclusion" to the probe into the remarks of Janusz Korwin-Mikke at the legislature and promised "a penalty commensurate with the gravity of the offence."

Korwin-Mikke, a radical right-winger who leads a marginal party, said during a debate on the pay gap between men and women: "Of course women must earn less than men because they are weaker, they are smaller, they are less intelligent. They must earn less, that's all."

He could face sanctions such as a reprimand, a fine or a temporary suspension.

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4:40 a.m.

Denmark's minister for gender equality, Karen Ellemann, is focusing on paternity leave on International Women's Day, saying equality between the sexes "also means equal opportunities to be a parent."

Ellemann spoke Wednesday when visiting Danish companies "to learn more about what makes fathers choose as they do."

According to official figures, Danish men in 2014 took on average 29.5 days' paternity leave, or 11 days more than they did in 2003.

In Denmark, parents have the right to a total of 52 weeks' leave with maternity subsistence allowance. The mother is entitled to four weeks' maternity leave prior to giving birth and 14 weeks after; the father is entitled to two weeks' leave after the birth; and the remaining time can be divided according to individual wishes.

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4:30 a.m.

Scores of women working in the childcare industry in Australia have walked off the job early on International Women's Day to protest what they deem inadequate pay rates.

The United Voice union, which represents the workers, said more than 1,000 staffers at childcare centers in every state and territory in Australia stopped working at 3:20 p.m. on Wednesday to call attention to wage disparities felt throughout an industry where the vast majority of workers are women.

"3:20 represents the time that Australian women ostensibly start working for free in comparison to men if you take into account the gender pay gap," said Helen Gibbons, the union's assistant national secretary.

"We know that this has traditionally been seen as women's work," Gibbons said. "It's 2017 and this is not OK to continue. The people who work in this sector demand equal pay."

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2 a.m.

Organizers of January's Women's March have called for women to take the day off and encouraged them not to spend money to show their economic strength and impact on American society.

"A Day Without a Woman" on Wednesday is the first major action by organizers since the nationwide marches held the day after President Donald Trump's inauguration that drew millions of women into the streets in protest against misogyny, inequality and oppression. Though it is unclear how many women could participate, thousands across the country have signaled their support and interest online and to employers.

The event coincides with the U.N.-designated International Women's Day, and organizers say they want to "stand with women around the globe" who supported their efforts Jan. 21 with similar protests in cities around the world.

Police block women during a rally at the U.S. Embassy to mark International Women's Day Wednesday, March 8, 2017 in Manila, Philippines. Women all over the world mark the women's day with rallies and protests to highlight the role of women in society. (AP Photo/Bullit Marquez)
International Women’s Day Latest: Poland’s women show the government red cards