In an investor meeting in New York, Puerto Rico's top finance official said it's too soon to discuss how creditors will be affected as the commonwealth tries to restructure its $72 billion debt.
Protesters outside chanted "you broke it, you fix it," as Government Development Bank president Melba Acosta addressed about 300 representatives of investment funds, insurance companies and other creditors gathered at Citigroup Inc.'s Park Avenue headquarters on Monday.
While she pressed to resolve this financial burden, she added that it was too soon to talk about what other debts could get hit. Officials have yet to come up with a plan to remedy the financial situation, according to Bloomberg.
Since Governor Alejandro Garcia Padilla last month said that the junk-related commonwealth can't afford to pay its debts, the meeting became the first held with public investors. Bond prices in Puerto Rico have plummeted in the midst of speculation that Puerto Rico is heading toward default, after selling an unprecedented debt.
In a televised speech on June 29, Padilla said that he will seek to postpone debt repayment for a number of years and instructed his officials to draft a restructuring plan by August 30. Chicago Tribune said that a report from three ex-IMF economists were made public last week suggesting that Puerto Rico swap current bonds for new ones with later maturities and lower payments.
Hawaii News Now in a report from Associated Press said that Puerto Rico's bonds were popular with U.S. mutual funds because they are triple-tax exempt, but hedge funds and distressed-debt buyers began stepping in to buy up debt as the island's economy worsened and its credit rating dropped.
Padilla said that he will form a team that will talk to bondholders on delaying debt payments and restructure the island's $72 billion debt. A $9.8 billion budget is still under debate as it calls for $674 million in cuts and sets aside $1.5 billion to help pay the debt. The budget needs to be approved on Tuesday.
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