A Pause for Puerto Rico While the Hits Keep Coming
by meep
About a year ago, Puerto Rico defaulted:
Puerto Rico Finally Defaults — Now What?
by meep4 August 2015, 06:32
Of course, there are defaults and there are defaults.This one is a bit of a whimper.
That one may have been a bit of a whimper, but that wasn’t the end of it:
- December 2015: Very Temporary Respite on Debt
- January 4, 2016: Puerto Rico Default Day!
- January 8, 2016: Playing for Time after the Default
- January 20, 2016: Considering Bankruptcy Options for Puerto Rico
- February 2016: Puerto Rican Pensions Before Bonds
- April 2016: The Long-Term Build-up to Puerto Rican Insolvency
- May 2016: Puerto Rico Defaults Again
Over the past year, there have been multiple “missed” payments:
To be sure, the people who were “expecting” to be paid did actually miss those payments. That was money legitimately owed to them.
And they didn’t get it.
Remember this graph?
I’m looking for the equivalent where it shows the portion actually paid. I see plenty of graphs of the total debt amount amassing, as well as what should have been paid.
But no graphs of what was actually paid.
PROMISES, PROMISES
So the Supreme Court said that Puerto Rico couldn’t pre-empt federal bankruptcy laws (which didn’t allow for PR govt bankruptcy), Congress passed PROMESA and was signed into law by Obama, and Puerto Rico suspended debt payments right before Obama signed:
Puerto Rico authorized suspension of payments on its general obligation debt on Thursday just minutes after U.S. President Barack Obama signed a law creating a federal oversight board with authority to negotiate the restructuring of the island’s $70 billion in debt.
The executive order issued by Puerto Rico’s governor, Alejandro Garcia Padilla, comes just one day before the U.S. territory was due to make $1.9 billion worth of debt payments on July 1, including some $780 million in constitutionally-backed, general obligation bonds.
By the way, there’s an August payment to default on as well:
More Defaults Likely to Come: What Puerto Rico Owes on Aug. 1
Sales-tax payment of $256 million expected to be made
Island owes $1.3 million of interest on general obligationsIt’s that time again for Puerto Rico bondholders.
The commonwealth and its agencies owe about $346 million in bond payments on Aug. 1, most of which goes toward repaying sales-tax supported debt. The deadline follows the island’s July 1 default on nearly $1 billion of principal and interest, the largest such payment failure in the history of the $3.7 trillion municipal bond market.
While sales-tax investors are set to be repaid with funds already in the bond trustee’s account, the Government Development Bank, which defaulted in May, faces another payment deadline. Some Puerto Rico entities started skipping payments a year ago, leading up to the commonwealth missing $780 million due on general obligations at the start of the month.
Puerto Rico and its agencies racked up $70 billion of debt after years of borrowing to paper over budget shortfalls. President Barack Obama on June 30 enacted a law to create a federal control board that will oversee any debt restructuring and monitor the island’s budgets. It also prohibits creditors from suing the commonwealth for repayment of debt.
Let’s see if I have the situation correct:
1. Puerto Rico is not making any payments on its general obligation debt
2. Creditors not getting paid can’t sue for relief (unlike in a real bankruptcy proceeding, where they’d be able to have their interests represented.)
3. There is supposed to be some kind of federal financial control board, but it’s not formed yet.
4. Congress is forming a committee to make recommendations to improve PR’s lot
5. Puerto Rico should get shut out of debt markets for at least a few years
and on top of all that, they’ve got the latest epidemic raging through their island.
ON TOP OF ALL THIS: ZIKA
One excerpt on estimates for projected impact in Puerto Rico:
CDC: Zika could affect 10,000 pregnancies in Puerto Rico by year’s end
The Zika virus could affect up to 10,000 pregnant women in Puerto Rico this year, putting hundreds of babies at risk of catastrophic birth defects, according to the Centers for Disease Control and Prevention.
Zika is spreading so quickly on the island that it’s likely to infect one in four people by the end of the year, CDC director Thomas Frieden said. The greatest danger from Zika is microcephaly, in which infants are born with abnormally small heads and incomplete brain development, he said.
“That’s horrifying,” Frieden said. “This is a silent epidemic that is rapidly spreading through Puerto Rico.”
…..
In Puerto Rico, Zika appears to be following the same pattern seen with another mosquito-borne disease, chikungunya, which arrived in the Western Hemisphere in 2013. Within a year, the disease infected one in four Puerto Ricans, Frieden said. While chikungunya can cause excruciating joint pain, it’s not known to harm fetuses.Fighting Zika in Puerto Rico will be challenging.
Few people have air conditioning or screens on their doors and windows, Frieden said. Standing water collects on many areas of the island after heavy tropical rains, which provides breeding grounds for mosquitoes.
The mosquitoes that spread Zika, including the Aedes aegypti species, are mostly resistant to common pesticides, according to the CDC report.
A few more stories:
Spread of Zika Virus in Puerto Rico Accelerates
One in four people on the island could be infected by the end of this year, CDC predicts
The speed at which the Zika virus is spreading in Puerto Rico has accelerated sharply, according to new federal data, complicating already difficult efforts to prevent thousands of pregnant women in the territory from infection.
The Centers for Disease Control and Prevention has predicted that one in four people on the island could be infected with Zika by the end of this year and has been working with the Puerto Rican government to try to slow its spread and protect pregnant women.
Now, new data from the agency show that Zika took off in the late spring and early summer as prime mosquito season got under way, and is on course to fulfill that disturbing prediction, said CDC Director Tom Frieden.
…..
According to the CDC’s latest report, released Friday, Zika has spread virtually to all corners of the island, with cases reported in 77 of 78 municipalities. Authorities identified 5,582 Zika cases between November 2015, when the virus reached the island, and July 7. That includes 672 pregnant women. More than half of the overall cases were diagnosed between late May and early July, according to data from the Puerto Rico Department of Health.But diagnosed cases paint only part of the picture, because about 80% of those who are infected never develop any symptoms, the CDC says.
Hmmm, interesting about that last item.
Makes me think of HPV, which is pretty widespread and symptomless for many people… except for the ones who develop cancer as a result of it.
Similar story from ABC News on Zika spike in Puerto Rico.
INTERMISSION? PRELUDE TO THE NEXT ACT?
I think I may have been a little too flip in calling last year’s whimper of a default as the end of the beginning. I don’t think that beginning has yet ended, as so much is still not decided.
Essentially a time-out has been called while Congress does or does not act, and fiscal sovereignty has been taken away from Puerto Rico.
Maybe this is an intermission after Act 1.
It’s hard to tell.
