Late on January 24, 2018, the government of Puerto Rico released a revised fiscal plan under which the commonwealth would pay nothing in debt service over the next five years and would only be able to support $2.5 billion to $14 billion of debt in the long term, a fraction of its current level. The plan suggests that holders of its bonds might receive as little as five cents on the dollar.
The plan assumes that the federal government will provide $35.3 billion in federal disaster assistance for the devastation caused by Hurricane Maria. That figure is one third the amount that the island’s Governor Ricardo Rossello recently requested but still more than Congress is likely to provide.1
The forecast in the plan shows that the government expects to have a shortfall, before any debt is paid, of $3.4 billion through 2022. Continue Reading