Correspondent, New York
Megan's Feed
May 29, 2015

Puerto Rico’s PREPA to ask creditors to take some pain – sources

NEW YORK (Reuters) – Puerto Rico’s debt-ridden power authority PREPA is expected to ask bondholders to take some pain as part of a turnaround plan it will present to creditors on Monday, kicking off what could be heated negotiations over terms, sources familiar with the situation said.

PREPA and its creditors must reach agreement quickly or risk hurting the Caribbean island’s broader efforts to climb out of a $73 billion debt hole. Not all creditors are in step, with some more willing to compromise by accepting payment deferrals, those sources say.

May 29, 2015

Insight – Puerto Rico’s PREPA to ask creditors to take some pain-sources

NEW YORK (Reuters) – Puerto Rico’s debt-ridden power authority PREPA is expected to ask bondholders to take some pain as part of a turnaround plan it will present to creditors on Monday, kicking off what could be heated negotiations over terms, sources familiar with the situation said.

PREPA and its creditors must reach agreement quickly or risk hurting the Caribbean island’s broader efforts to climb out of a $73 billion (£47.7 billion) debt hole. Not all creditors are in step, with some more willing to compromise by accepting payment deferrals, those sources say.

May 20, 2015

As Illinois runs out of options in budget crisis, tax rises seen in the cards

NEW YORK/CHICAGO (Reuters) – With no easy way to financially engineer or negotiate its way out of a budget and pensions crisis, Illinois is likely to dish out some unpleasant medicine to its residents in the next few years. And investors say that is most likely to come in the form of higher taxes.

Given the Democrats’ control of the state legislature and their opposition to many proposals for spending cuts, municipal bond fund managers see little alternative for Republican Governor Bruce Rauner other than eventually agreeing to hike taxes, such as raising the state’s income tax or broadening its sales tax base.

May 20, 2015

Insight – As Illinois runs out of options in budget crisis, tax rises seen in the cards

NEW YORK/CHICAGO (Reuters) – With no easy way to financially engineer or negotiate its way out of a budget and pensions crisis, Illinois is likely to dish out some unpleasant medicine to its residents in the next few years. And investors say that is most likely to come in the form of higher taxes.

Given the Democrats’ control of the state legislature and their opposition to many proposals for spending cuts, municipal bond fund managers see little alternative for Republican Governor Bruce Rauner other than eventually agreeing to hike taxes, such as raising the state’s income tax or broadening its sales tax base.

May 8, 2015

Illinois’ supreme court overturns state’s 2013 pension reform law

By Megan Davies and Karen Pierog

(Reuters) – Illinois’ supreme court has overturned the
state’s 2013 pension reform law, which reduced pension costs and
increased retirement ages, according to a copy of the decision,
sending the state’s bonds lower.

The state has the worst-funded pension system and the lowest
credit ratings of all 50 states and has contended that pension
costs are making it difficult to fund services such as
healthcare and public safety.

May 7, 2015

U.S. charter school investors, lenders, authorizers should talk more -study

NEW YORK (Reuters) – Investors and lenders to charter schools and the authorizers of those schools should communicate better in order to lessen the risk of making a poor investment or facing an unexpected school closure, according to a report released on Thursday.

Of 393 charter school bond offering documents analyzed, only six used evaluation reports from authorizers detailing ongoing monitoring of a school, said the report, by community financing organization the Local Initiatives Support Corporation and the National Association of Charter School Authorizers (NACSA), which represents authorizers and sets standards.

Apr 30, 2015

Puerto Rico governor blasts lawmakers on tax reform veto

NEW YORK, April 30 (Reuters) – Puerto Rico’s House of
Representatives voted against a controversial tax reform, a move
blasted by the governor on Thursday as irresponsible and
dangerous to the island’s financial stability.

Some of the U.S. territory’s general obligation bonds fell
following the news to their lowest levels since being sold. The
House voted against the bill 28-22, according to a government
source.

Apr 30, 2015

Puerto Rico utility wins bondholder agreement for extra time

NEW YORK, April 30 (Reuters) – Puerto Rico’s electric power
authority, PREPA, struggling with $9 billion of debt, won
agreement from bondholders to extend a forbearance agreement by
35 days, according to a statement by a key bondholder faction.

Under the new agreement, which expires on June 4, PREPA has
agreed to a June 1 deadline to provide creditors with a debt
restructuring plan, said the group, which represents 40 percent
of all PREPA bondholders.

Apr 29, 2015

Baltimore’s businesses shudder after riots, now fear investment, tourism will be hit

NEW YORK, April 28 (Reuters) – A night of arson and looting
in Baltimore has shaken the confidence of people running
businesses beyond the areas hardest hit. In particular, they are
concerned a city that took many years to start to recover from
devastating riots in 1968 could be put back on its heels.

While Baltimore’s unemployment rate is higher than the
national average and it is lagging in per capita income, the
city government’s budget is stable, it has a diverse business
sector, elite universities and medical facilities, and a growing
number of tourists flock to its downtown harbor.

Apr 8, 2015

Insight – Emanuel’s re-election present: Chicago’s fiscal nightmare is just beginning

CHICAGO/NEW YORK (Reuters) – Rahm Emanuel may have been elected to a second term as Chicago’s mayor on Tuesday but now he faces a stark choice: inflict pain on the city’s population in the form of unpopular measures such as higher taxes or kick its problems further down the road and risk a fiscal crisis that could even lead to bankruptcy later.

While voters appear to have seen President Barack Obama’s former chief of staff as more able than labour union-backed challenger Jesus “Chuy” Garcia to deal with Chicago’s massive public pension liabilities, neither candidate squarely addressed what could be a fiscal nightmare for the city.