Megan Davies http://blogs.reuters.com/megan-davies Megan Davies's Profile Thu, 22 Oct 2015 22:00:21 +0000 en-US hourly 1 http://wordpress.org/?v=4.2.5 Exclusive: Puerto Rico creditor advisers to meet Commonwealth Tuesday – sources http://www.reuters.com/article/2015/10/22/us-usa-puertorico-restructuring-exclusiv-idUSKCN0SG2HV20151022?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/megan-davies/2015/10/22/exclusive-puerto-rico-creditor-advisers-to-meet-commonwealth-tuesday-sources/#comments Thu, 22 Oct 2015 21:11:22 +0000 http://blogs.reuters.com/megan-davies/?p=1406 NEW YORK/SAN JUAN (Reuters) – Advisers for several Puerto Rico bondholder groups are scheduled to meet on Tuesday with advisers for the U.S. Territory to discuss debt restructuring, after key talks with one of the groups collapsed, two sources familiar with the matter said on Thursday.

The so-called due diligence meeting is thought to be the first step toward coordinating bondholder efforts to resolve the issue, said one of the sources. They both declined to be named because the talks are confidential.

Puerto Rico has been urging its many bondholder groups to accept debt restructuring deals to haul itself out of a fiscal crisis. The U.S. Territory said in the summer that it could not repay its debt and in August defaulted for the first time. It since said it would try and restructure $18 billion of debt due over the next five years.

Talks with individual groups have been stuttering. On Wednesday, the island’s Government Development Bank (GDB) said it had failed to arrive at a deal with creditors. Puerto Rico has also yet to persuade bond insurers of its power utility PREPA to sign on to a deal reached with bondholders. A creditor deal between PREPA and bondholders is due to expire Thursday.

The island’s government is now pushing for a comprehensive voluntary exchange offer, it said in a statement on Wednesday. The offer would involve a so-called superbond that provides just one credit for various existing bonds, possibly depending on the ranking of those credits, a source familiar with the situation previously said.

Tuesday’s meeting is expected to be in New York, one of the sources said, and is being organized by the Commonwealth’s advisers, restructuring adviser Millstein & Co and legal firm Cleary Gottlieb Steen & Hamilton.

Puerto Rico’s debt is split between various holders which own a variety of paper such as General Obligation bonds, COFINA notes, which are bonds backed by sales tax; and Government Development Bond debt, as well as bonds of the Puerto Rico Infrastructure Financing Authority (PRIFA), and the Puerto Rico Aqueduct and Sewer Authority (PRASA). It was not clear whether representatives of every group would be at Tuesday’s meeting.

The PREPA restructuring is seen as separate because a deal has already been struck between bondholders and the utility.

Puerto Rico in July met publicly with bondholders at the offices of Citibank in New York, to introduce the idea of a debt restructuring and plead with them not to sue. That meeting was webcast.

Puerto Rico’s fiscal crisis was the subject of a Senate committee hearing on Thursday.

(Reporting by Megan Davies and Nick Brown; Editing by Richard Chang)

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Puerto Rico creditor advisers to meet Commonwealth Tuesday -sources http://uk.reuters.com/article/2015/10/22/usa-puertorico-restructuring-idUKL1N12M2JO20151022?feedType=RSS&feedName=everything&virtualBrandChannel=11708 http://blogs.reuters.com/megan-davies/2015/10/22/puerto-rico-creditor-advisers-to-meet-commonwealth-tuesday-sources/#comments Thu, 22 Oct 2015 21:00:00 +0000 http://blogs.reuters.com/megan-davies/?p=1408 NEW YORK/SAN JUAN, Oct 22 (Reuters) – Advisers for several
Puerto Rico bondholder groups are scheduled to meet on Tuesday
with advisers for the U.S. Territory to discuss debt
restructuring, after key talks with one of the groups collapsed,
two sources familiar with the matter said on Thursday.

The so-called due diligence meeting is thought to be the
first step toward coordinating bondholder efforts to resolve the
issue, said one of the sources. They both declined to be named
because the talks are confidential.

Puerto Rico has been urging its many bondholder groups to
accept debt restructuring deals to haul itself out of a fiscal
crisis. The U.S. Territory said in the summer that it could not
repay its debt and in August defaulted for the first time. It
since said it would try and restructure $18 billion of debt due
over the next five years.

Talks with individual groups have been stuttering. On
Wednesday, the island’s Government Development Bank (GDB) said
it had failed to arrive at a deal with creditors. Puerto Rico
has also yet to persuade bond insurers of its power utility
PREPA to sign on to a deal reached with bondholders. A creditor
deal between PREPA and bondholders is due to expire Thursday.

The island’s government is now pushing for a comprehensive
voluntary exchange offer, it said in a statement on Wednesday.
The offer would involve a so-called superbond that provides just
one credit for various existing bonds, possibly depending on the
ranking of those credits, a source familiar with the situation
previously said.

Tuesday’s meeting is expected to be in New York, one of the
sources said, and is being organized by the Commonwealth’s
advisers, restructuring adviser Millstein & Co and legal firm
Cleary Gottlieb Steen & Hamilton.

Puerto Rico’s debt is split between various holders which
own a variety of paper such as General Obligation bonds, COFINA
notes, which are bonds backed by sales tax; and Government
Development Bond debt, as well as bonds of the Puerto Rico
Infrastructure Financing Authority (PRIFA), and the Puerto Rico
Aqueduct and Sewer Authority (PRASA). It was not clear whether
representatives of every group would be at Tuesday’s meeting.

The PREPA restructuring is seen as separate because a deal
has already been struck between bondholders and the utility.

Puerto Rico in July met publicly with bondholders at the
offices of Citibank in New York, to introduce the idea of a debt
restructuring and plead with them not to sue. That meeting was
webcast.

Puerto Rico’s fiscal crisis was the subject of a Senate
committee hearing on Thursday.

(Reporting by Megan Davies and Nick Brown; Editing by Richard
Chang)

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Puerto Rico faces skeptical senators for Treasury turnaround plan http://www.reuters.com/article/2015/10/22/usa-puertorico-treasury-idUSL1N12M1MC20151022?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/megan-davies/2015/10/22/puerto-rico-faces-skeptical-senators-for-treasury-turnaround-plan/#comments Thu, 22 Oct 2015 18:25:26 +0000 http://blogs.reuters.com/megan-davies/?p=1404 NEW YORK/SAN JUAN, Oct 22 (Reuters) – U.S. Senators
expressed skepticism about how much they could help debt-ridden
Puerto Rico at a Senate hearing on Thursday, with Democrats
urging the U.S. Treasury to do more on its own and Republicans
quizzing the island’s Governor on its fiscal disclosure.

Puerto Rico, a U.S. territory home to 3.5 million, is
buckling under $72 billion in debt and a 45 percent poverty
rate. With financial creditors resisting reductions to debt
payments and political gridlock threatening proposed spending
reforms, some Puerto Rican leaders have called on the U.S.
government to step in.

U.S. Treasury Secretary counselor Antonio Weiss appealed to
Congress to help the U.S. territory and warned Puerto Rico could
face a humanitarian crisis without federal action.

He repeated the key points of a plan released by the
Treasury on Wednesday, saying Congress should provide tools for
Puerto Rico to restructure its liabilities, increase Medicaid
support and boost economic growth through tax credits.

Democratic Senator Elizabeth Warren said she would support
bills in Congress to aid Puerto Rico, but urged Weiss and
Treasury to be “just as creative in coming up with solutions as
it was when the big banks called” for help during the 2008
financial crisis.

“Treasury needs to step up and show more leadership here,”
Warren said. “During the financial crisis, when the banks were
in trouble, Treasury did a lot more than just bail them out.”

Senator Mazie Hirono, a Democrat, echoed Warren, calling for
Treasury to empty its toolbox: “It may take a while for Congress
to act  so short of Congress acting, we would want to be
assured that the administration is doing everything it can to
assist” on its own.

Democratic Senator and Presidential candidate Bernie Sanders
told Weiss that Treasury Secretary Jack Lew should call a
meeting with unions and “all the players” in Puerto Rico,
including so-called “vulture funds,” to work out a broad
consensual agreement. He challenged hedge funds’ demands for
repayment, saying, “When you make risky investments, you should
not expect to get 100 cents on the dollar.”

Without bipartisan support in Congress, Treasury is limited
in what it can achieve.

Moreover, Congress has shown little appetite for action and
Thursday’s hearing did not seem to advance the fate of existing
bills to extend bankruptcy protections to Puerto Rico and to
improve the island’s federal healthcare funding, which have
received numerous Democratic co-sponsors but not received
traction from Republicans, which control Congress.

“Congress, even in midst of crisis, takes a long while to
work its magic,” said Senator Lisa Murkowski, the Republican
chair of the Energy and Natural Resources Committee, as she
asked Weiss whether other administrative actions could be
advanced at this point.

Senator John Barrasso, a Republican from Wyoming, questioned
the impact of granting bankruptcy protection to Puerto Rico on
individual investors in his state.

“What happens when a retiree in Wyoming goes to the mailbox,
gets their statement and finds their investment is negatively
impacted because congress changed the rules?” Barrasso said.

Murkowski also continued a line of questioning from a
September hearing, when powerful Senate Finance Committee
Chairman Orrin Hatch warned there could be no help for Puerto
Rico without better financial disclosure.

“There has been a lot of concern about the fact that we
haven’t seen clearly the financial reports hoped for,” said
Murkowski. “There is concern about the verifiability of Puerto
Rico’s financial data.”

The island’s governor, Alejandro Garcia Padilla, said 2014
audited financial figures should be ready in the coming weeks or
months and said the Commonwealth was “dealing with it” and
putting pressure on auditors to deliver the report.

Padilla said Puerto Rico may have to decide between paying
its creditors or essential services, in which case it would
“have no choice but to default.” The island defaulted on part of
its debt in August.

(Reporting by Megan Davies and Nick Brown; Editing by Meredith
Mazzilli)

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Puerto Rico faces humanitarian crisis without federal action -Treasury http://www.reuters.com/article/2015/10/22/usa-puertorico-treasury-idUSL1N12M1OO20151022?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/megan-davies/2015/10/22/puerto-rico-faces-humanitarian-crisis-without-federal-action-treasury/#comments Thu, 22 Oct 2015 14:35:39 +0000 http://blogs.reuters.com/megan-davies/?p=1402 NEW YORK/SAN JUAN (Reuters) – U.S. Treasury Secretary
counselor Antonio Weiss warned that Puerto Rico faces a
humanitarian crisis without federal action, as he appealed to
Congress to help the debt-ridden U.S. territory, in comments to
a Senate committee hearing on Thursday.

Puerto Rico, a U.S. territory home to 3.5 million, is
buckling under $72 billion in debt and a 45 percent poverty
rate. With financial creditors resisting reductions to debt
payments and political gridlock threatening proposed spending
reforms, some Puerto Rican leaders have called on the U.S.
government to step in.

Weiss said that without action by Congress, Puerto Rico’s
crisis would escalate and reiterated that the Obama
administration’s policies were “not a bailout” for the island.

He repeated the key points of a plan released by the
Treasury on Wednesday, saying Congress should provide tools for
Puerto Rico to restructure its liabilities, increase Medicaid
support and boost economic growth through tax credits.

A key element of Treasury’s proposal is its endorsement of
extending bankruptcy protections not only to Puerto Rico’s
public agencies, but to the island’s government itself – a
notion championed by some Puerto Rican leaders but seen as too
radical to be politically practical.

Cities, towns and municipal agencies can file for under the
U.S. Chapter 9 bankruptcy code, while states cannot. Puerto Rico
is exempt from Chapter 9 because it is a commonwealth.

“Bankruptcy is not a bailout,” Weiss said, according to
testimony released ahead of his remarks. “Allowing Puerto Rico
to resolve its liabilities under the supervision of a bankruptcy
court involves no federal financial assistance whatsoever.
Instead, bankruptcy requires shared sacrifice from both Puerto
Rico and its creditors.”

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Analysis: U.S. Treasury presses Congress to help Puerto Rico, but faces tough sell http://www.reuters.com/article/2015/10/22/usa-puertorico-treasury-idUSL1N12M0RE20151022?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/megan-davies/2015/10/22/analysis-u-s-treasury-presses-congress-to-help-puerto-rico-but-faces-tough-sell/#comments Thu, 22 Oct 2015 11:16:21 +0000 http://blogs.reuters.com/megan-davies/?p=1399 SAN JUAN/NEW YORK (Reuters) – The Obama administration is
turning up the heat on U.S. lawmakers to help Puerto Rico out of
its worsening debt crisis, but it is likely to face heavy
resistance from the Republican-controlled Congress.

The U.S. Treasury on Wednesday released a list of proposals
it wants Congress to enact to help the U.S. territory, such as
healthcare funding measures, and tax and bankruptcy legislation.

Yet without bipartisan support in Congress, Treasury is
limited in what it can achieve, and anything that smells like a
bailout for the island, struggling with $72 billion debt, is
unlikely to get support.

“We need to bring the U.S. government to the table,” said
former Puerto Rico Governor Anibal Acevedo Vila. “There’s no way
we can get out of this crisis if they don’t come to the table.
We’re not begging for help but they have responsibility also.”

A sun-kissed Caribbean island that lures investors with
tax-exempt bonds, Puerto Rico is buckling under the debt burden
while 45 percent of its citizens live in poverty. With
bondholders resisting proposals to reduce the principal and
interest on their debt holdings, and political gridlock
threatening spending reforms proposed by Governor Alejandro
Garcia Padilla, the territory has said it will run out of cash
by next June.

Some Democratic lawmakers met with Puerto Rican leaders in
Orlando, Florida last week, and vowed to lobby President Barack
Obama’s administration to provide more help to the island of 3.5
million.

U.S. Treasury Secretary Jack Lew and counselor Antonio Weiss
met with interest groups on Monday, while Weiss will testify at
Thursday’s hearing on Puerto Rico before the U.S. Senate
Committee on Energy and Natural Resources.

Yet a bill to extend bankruptcy protections to Puerto Rico
by giving it the option of filing under Chapter 9 of the
bankruptcy code has made little headway. And neither has a bill
that would improve the island’s federal healthcare funding.

Critics complain that Puerto Rico receives far less in
federal Medicaid funding than it would if it were a state and
that it deserves to be on an equal footing. Treasury’s proposal
calls for legislation to close the gap.

SUPER CHAPTER 9

Meanwhile, the island does not have access to Chapter 9,
which governs municipal insolvencies and allows public entities
like cites, towns and agencies to file for bankruptcy.

While legislation is pending to extend Chapter 9 to Puerto
Rico’s municipalities and public agencies, Treasury’s proposal
would go a step further, by allowing the island itself to file
for bankruptcy.

“With the escalating crisis, bankruptcy protection is now
needed for the Commonwealth as well,” Treasury said in a 10-page
proposal.

Treasury’s support for co-called “Super Chapter 9″ is
surprising because, while the idea has been championed by some
Puerto Rico advocates in Congress, it is seen as more radical
than extending Chapter 9 protections.

Congress has shown little appetite for supporting existing
bills on bankruptcy or healthcare. While both have received
numerous Democratic co-sponsors, powerful Senate Finance
Committee Chairman Orrin Hatch, a Republican, in September
warned there could be no help for Puerto Rico without better
financial disclosure, and expressed doubts about extending
bankruptcy protection.

U.S. Senator Bill Nelson, a Florida Democrat, said a bill
could get passed by being attached to broader legislation,
although it would be an uphill battle given the stalemate in
Washington.

DEAL FAILURE

Weiss’ appearance on Thursday could help give some
credibility to the embattled territory but whether Treasury can
help Puerto Rico restructure its debt is less certain.

“The Treasury has limited flexibility when it comes to
intervening in financial markets without an act of Congress,”
said Robert Jackson, a professor at Columbia Law School and
former adviser at Treasury. “Treasury would have to go in less
as a provider of capital and more as a provider of advice and
guidance.”

Jackson said the U.S. Federal Reserve could under certain
circumstances use its bond-buying authority to buy municipal
bonds, but that such a scenario was very unlikely.

Puerto Rico has been trying to persuade different investor
groups to sign on to deals to restructure debt. But on
Wednesday, the Government Development Bank said it had failed to
come to a deal with creditors. The island’s authorities have
also yet to persuade bond insurers of its power utility PREPA to
sign onto a deal reached with bondholders.

The island’s government is instead pushing for a
comprehensive voluntary exchange offer, it said in a statement
on Wednesday. Such an offer, or so-called ‘superbond,’ could
exchange just one credit for various existing bonds, possibly
depending on the ranking of those credits, said a source
familiar with the situation.

The Wall Street Journal last week reported that Treasury was
considering administering this bond.

A source familiar with the matter said a superbond was among
many options Treasury has looked at.

However, Treasury said publicly it would not “undertake” any
of Puerto Rico’s debt, and Weiss told some Democratic Senate
staffers in a meeting last week that there would be no such
move, according to congressional sources.

A separate source familiar with the matter also said a
Treasury superbond was not on the table.

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Treasury presses Congress to help Puerto Rico, but faces tough sell http://www.reuters.com/article/2015/10/22/us-usa-puertorico-treasury-analysis-idUSKCN0SG00W20151022?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/megan-davies/2015/10/22/treasury-presses-congress-to-help-puerto-rico-but-faces-tough-sell/#comments Thu, 22 Oct 2015 00:36:28 +0000 http://blogs.reuters.com/megan-davies/?p=1397 SAN JUAN/NEW YORK (Reuters) – The Obama administration is turning up the heat on U.S. lawmakers to help Puerto Rico out of its worsening debt crisis, but it is likely to face heavy resistance from the Republican-controlled Congress.

The U.S. Treasury on Wednesday released a list of proposals it wants Congress to enact to help the U.S. territory, such as healthcare funding measures, and tax and bankruptcy legislation.

Yet without bipartisan support in Congress, Treasury is limited in what it can achieve, and anything that smells like a bailout for the island, struggling with $72 billion debt, is unlikely to get support.

“We need to bring the U.S. government to the table,” said former Puerto Rico Governor Anibal Acevedo Vila. “There’s no way we can get out of this crisis if they don’t come to the table. We’re not begging for help but they have responsibility also.”

A sun-kissed Caribbean island that lures investors with tax-exempt bonds, Puerto Rico is buckling under the debt burden while 45 percent of its citizens live in poverty. With bondholders resisting proposals to reduce the principal and interest on their debt holdings, and political gridlock threatening spending reforms proposed by Governor Alejandro Garcia Padilla, the territory has said it will run out of cash by next June.

Some Democratic lawmakers met with Puerto Rican leaders in Orlando, Florida last week, and vowed to lobby President Barack Obama’s administration to provide more help to the island of 3.5 million.

U.S. Treasury Secretary Jack Lew and counselor Antonio Weiss met with interest groups on Monday, while Weiss will testify at Thursday’s hearing on Puerto Rico before the U.S. Senate Committee on Energy and Natural Resources.

Yet a bill to extend bankruptcy protections to Puerto Rico by giving it the option of filing under Chapter 9 of the bankruptcy code has made little headway. And neither has a bill that would improve the island’s federal healthcare funding.

Critics complain that Puerto Rico receives far less in federal Medicaid funding than it would if it were a state and that it deserves to be on an equal footing. Treasury’s proposal calls for legislation to close the gap.

SUPER CHAPTER 9

Meanwhile, the island does not have access to Chapter 9, which governs municipal insolvencies and allows public entities like cites, towns and agencies to file for bankruptcy.

While legislation is pending to extend Chapter 9 to Puerto Rico’s municipalities and public agencies, Treasury’s proposal would go a step further, by allowing the island itself to file for bankruptcy.

“With the escalating crisis, bankruptcy protection is now needed for the Commonwealth as well,” Treasury said in a 10-page proposal. 

Treasury’s support for co-called “Super Chapter 9″ is surprising because, while the idea has been championed by some Puerto Rico advocates in Congress, it is seen as more radical than extending Chapter 9 protections.

Congress has shown little appetite for supporting existing bills on bankruptcy or healthcare. While both have received numerous Democratic co-sponsors, powerful Senate Finance Committee Chairman Orrin Hatch, a Republican, in September warned there could be no help for Puerto Rico without better financial disclosure, and expressed doubts about extending bankruptcy protection.

U.S. Senator Bill Nelson, a Florida Democrat, said a bill could get passed by being attached to broader legislation, although it would be an uphill battle given the stalemate in Washington.

   

DEAL FAILURE

Weiss’ appearance on Thursday could help give some credibility to the embattled territory but whether Treasury can help Puerto Rico restructure its debt is less certain.

“The Treasury has limited flexibility when it comes to intervening in financial markets without an act of Congress,” said Robert Jackson, a professor at Columbia Law School and former adviser at Treasury. “Treasury would have to go in less as a provider of capital and more as a provider of advice and guidance.”

Jackson said the U.S. Federal Reserve could under certain circumstances use its bond-buying authority to buy municipal bonds, but that such a scenario was very unlikely.

Puerto Rico has been trying to persuade different investor groups to sign on to deals to restructure debt. But on Wednesday, the Government Development Bank said it had failed to come to a deal with creditors. The island’s authorities have also yet to persuade bond insurers of its power utility PREPA to sign onto a deal reached with bondholders.

The island’s government is instead pushing for a comprehensive voluntary exchange offer, it said in a statement on Wednesday. Such an offer, or so-called ‘superbond,’ could exchange just one credit for various existing bonds, possibly depending on the ranking of those credits, said a source familiar with the situation.

The Wall Street Journal last week reported that Treasury was considering administering this bond.

A source familiar with the matter said a superbond was among many options Treasury has looked at.

However, Treasury said publicly it would not “undertake” any of Puerto Rico’s debt, and Weiss told some Democratic Senate staffers in a meeting last week that there would be no such move, according to congressional sources.

A separate source familiar with the matter also said a Treasury superbond was not on the table.

(Reporting by Megan Davies; Editing by Martin Howell)

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U.S. Treasury supports broad bankruptcy protection for Puerto Rico http://www.reuters.com/article/2015/10/21/usa-puertorico-treasury-idUSL1N12L35I20151021?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/megan-davies/2015/10/21/u-s-treasury-supports-broad-bankruptcy-protection-for-puerto-rico/#comments Wed, 21 Oct 2015 23:19:24 +0000 http://blogs.reuters.com/megan-davies/?p=1394 SAN JUAN/NEW YORK, Oct 21 (Reuters) – The U.S. Treasury on
Wednesday urged Congress to help embattled Puerto Rico, saying
the U.S. commonwealth needs the ability to file for bankruptcy
protection, have independent fiscal oversight, changes to
Medicaid funding and access to the Earned Income Tax Credit.

“Only Congress has the authority to provide Puerto Rico with
the necessary tools to address its near-term challenges and
promote long-term growth,” Treasury said in a statement.

Puerto Rico, home to 3.5 million, is buckling under $72
billion in debt and a 45 percent poverty rate. With financial
creditors resisting reductions to debt payments and political
gridlock threatening proposed spending reforms, some Puerto
Rican leaders have called on the U.S. government to step in.

A bailout by the United States is seen as unlikely, but
Wednesday’s statement from Treasury is the strongest indication
yet that President Barack Obama’s administration supports some
form of federal assistance for the island.

A key element of Treasury’s proposal is its endorsement of
extending bankruptcy protections not only to Puerto Rico’s
public agencies, but to the island itself – a notion championed
by some Congressional Democrats but seen as too radical to be
politically practical.

Under Chapter 9 of U.S. federal bankruptcy laws, cities,
towns and municipal agencies can file for bankruptcy, but states
themselves cannot. While legislation is pending to extend
Chapter 9 to Puerto Rico – currently exempt because it is not a
state – Treasury’s proposal would go a step further by allowing
the island itself to file for bankruptcy.

“With the escalating crisis, bankruptcy protection is now
needed for the commonwealth as well,” Treasury said in a 10-page
proposal. “Congress should authorize a broader legal framework
that allows for a comprehensive restructuring of Puerto Rico’s
debts.”

Treasury would be a key ally for Puerto Rico in Washington,
where the island has struggled to find powerful supporters.

Antonio Weiss, a counselor to Treasury Secretary Jack Lew,
is scheduled to testify on Thursday at a hearing on Puerto Rico
before the Senate Committee on Energy and Natural Resources.

The department’s proposal makes clear its view that
resolving Puerto Rico’s crisis requires a debt restructuring and
concessions from bondholders, and that pension benefits should
be protected.

While Treasury has also called on Puerto Rico to fix its
traditionally opaque financial reporting practices and instill
more credible fiscal oversight, the proposal is generally in
line with what the island itself has said it needs from Congress
and its creditors.

(Reporting by Nick Brown in San Juan and Megan Davies in New
York; Editing by Chris Reese and Diane Craft)

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Puerto Rico breaks off talks with creditor group http://www.reuters.com/article/2015/10/21/usa-puertorico-gdb-idUSL1N12L1L720151021?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/megan-davies/2015/10/21/puerto-rico-breaks-off-talks-with-creditor-group/#comments Wed, 21 Oct 2015 16:02:27 +0000 http://blogs.reuters.com/megan-davies/?p=1392 By Dan Burns and Megan Davies

(Reuters) – Puerto Rico’s restructuring efforts took a
setback on Wednesday when talks between its Government
Development Bank (GDB) and a group of creditors fell apart with
no “mutually acceptable arrangement,” according to a statement
from the government.

Puerto Rico officials in September proposed restructuring
$18 billion of debt due in the coming five years as part of a
broad plan to pull the island out of financial crisis.

Melba Acosta, head of the GDB, had highlighted the bank as
being the next entity from the commonwealth to engage in
restructuring negotiations, following utility PREPA.

PREPA is still trying to close a deal with bond insurers,
after striking deals with bondholders and lenders in September
following about a year of talks.

The GDB, the debt-strapped U.S. territory’s chief fiscal
agent, said it will not move forward with an exchange offer for
GDB notes proposed earlier with the so-called “Ad Hoc Group” of
bond holders.

The GDB bondholder group consists of investment funds
Brigade, Fir Tree, Solus, Fore Research & Management, Avenue
Capital, Candlewood, and Claren Road, sources familiar with the
matter previously said.

Under discussion had been exchanging notes for notes in The
Puerto Rico Infrastructure Financing Authority (PRIFA) which
could be backed by oil revenues, a separate source familiar with
the situation previously said.

According to a term sheet released by the GDB, the bank had
proposed for bondholders to buy $750 million in new notes issued
by PRIFA and tender the around $850 million GDB notes they held,
in exchange for senior guaranteed PRIFA notes. Those notes would
have had a 8.5 percent coupon and be issued to yield 10 percent.

The GDB said it will now focus on a comprehensive voluntary
exchange offer for all creditors. GDB President Melba Acosta
said the bank had begun the process of signing non-disclosure
agreements with several creditors.

Acosta said a voluntary adjustment of the commonwealth’s
debt that also allows implementation of measures proposed in a
recent economic revitalization plan “is the best way to maximize
recoveries for creditors.”

Height Securities analyst Daniel Hanson said he believed the
sticking point was “a sufficiently strong security, and … the
GDB simply has nothing strong enough to offer.”

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U.S. Treasury Secretary met with Puerto Rico interest groups http://uk.reuters.com/article/2015/10/19/usa-puertorico-idUKL1N12J2LL20151019?feedType=RSS&feedName=everything&virtualBrandChannel=11708 http://blogs.reuters.com/megan-davies/2015/10/19/u-s-treasury-secretary-met-with-puerto-rico-interest-groups/#comments Mon, 19 Oct 2015 23:39:44 +0000 http://blogs.reuters.com/megan-davies/?p=1388 SAN JUAN/NEW YORK, Oct 19 (Reuters) – U.S. Treasury
Secretary Jack Lew on Monday met with Puerto Rican and Hispanic
interest groups to talk about the U.S. territory’s fiscal
problems and address the administration’s efforts to help speed
its economic recovery, the Treasury said in a statement,
confirming an earlier Reuters report.

The U.S. Treasury has repeatedly said it is not bailing out
indebted Puerto Rico but said last week it has been trying to
find ways to help the Commonwealth return to a sustainable
economic path.

“Participants were briefed on the scope of Puerto Rico’s
fiscal challenges and the administration’s efforts to bring the
federal government’s full capabilities to bear in providing
assistance to the Commonwealth to speed its economic recovery,”
a Treasury spokesman said in a statement.

Puerto Rico, in recession for nearly a decade, is trying to
restructure its debt, which amounts to $72 billion. It defaulted
on its debt in August.

Lew and National Economic Council Director Jeffrey Zients
met with a number of nonprofit organizations including the
National Puerto Rican Coalition, the Hispanic Federation, and
the National Council of La Raza. The meeting with the groups was
held in Washington, a source familiar with the matter earlier
said.

A spokeswoman for the Hispanic Federation earlier confirmed
that they were meeting Lew. The NPRC said on its twitter feed
earlier on Monday that it was preparing for the meeting.

Lew and Zients heard about the local impacts of the fiscal
situation and potential solutions to these challenges.

The island has had an uphill battle having its concerns
heard in Washington. Bills in Congress to extend U.S. bankruptcy
laws to the U.S. territory and to give it improved healthcare
funding have not progressed.

However, the U.S. Senate Committee on Energy and Natural
Resources will hold a hearing on Thursday on Puerto Rico’s
economy, debt, and options for Congress moving forward,
according to its website. The Treasury did not comment on
whether a member of their department would attend.

The Treasury spokesman said administration officials on
Monday discussed the need for congressional action to provide
Puerto Rico with access to an orderly restructuring regime.

“Without federal legislation, a resolution across Puerto
Rico’s financial liabilities would likely be difficult,
protracted, and costly,” the spokesman said.

(Reporting by Nick Brown and Megan Davies; Editing by Diane
Craft, Bernard Orr)

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Exclusive: Treasury Secretary to meet Puerto Rico interest groups http://www.reuters.com/article/2015/10/19/us-usa-puertorico-exclusive-idUSKCN0SD2G520151019?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/megan-davies/2015/10/19/exclusive-treasury-secretary-to-meet-puerto-rico-interest-groups/#comments Mon, 19 Oct 2015 21:30:46 +0000 http://blogs.reuters.com/megan-davies/?p=1386 SAN JUAN/NEW YORK (Reuters) – U.S. Treasury Secretary Jack Lew is to meet with Puerto Rican and Hispanic interest groups on Monday, said a source familiar with the situation and a spokeswoman for one of the organizations.

The U.S. Treasury has repeatedly said it is not bailing out indebted Puerto Rico but said last week it has been trying to find ways to help the Commonwealth return to a sustainable economic path. The Treasury declined comment on Monday.

Lew will meet with nonprofit organizations the National Puerto Rican Coalition, the Hispanic Federation, and the National Council of La Raza, among others, the source said.

The meeting with the groups is being held in Washington, the source said.

A spokeswoman for the Hispanic Federation confirmed that they were meeting Lew. The NPRC said on its twitter feed on Monday that it was preparing for the meeting.

The agenda is expected to focus on the U.S. territory’s economic crisis, the source said. Puerto Rico, in recession for nearly a decade, is trying to restructure its debt, which amounts to $72 billion. It defaulted on its debt in August.

The island has had an uphill battle having its concerns heard in Washington. Bills in Congress to extend U.S. bankruptcy laws to the U.S. territory and to give it improved healthcare funding have not progressed.

However, the U.S. Senate Committee on Energy and Natural Resources will hold a hearing on Thursday on Puerto Rico’s economy, debt, and options for Congress moving forward, according to their website. The Treasury did not comment on whether a member of their department would attend.

(Reporting by Nick Brown and Megan Davies; Editing by Diane Craft)

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