Madagascar Development

In the coming year, bankers in Puerto Rico will need to keep an eye on how steep cuts in government spending will affect the island’s consumers, says José Rafael Fernández, CEO of OFG Bancorp. Video A banker’s view of the Puerto Rican debt crisis

P uerto Rico Gov. Ricardo Rosselló signed a negotiated debt restructuring deal for the Government Development Bank Thursday, affecting $4.1 billion in bond debt. The deal offers three different bond restructurings that reduce principal by 25% to 45%. If it goes forward, bondholders would get to choose the restructuring deal for their bonds. The options with bigger principal reductions would offer bigger percent coupons and stronger security for repayment. Puerto Rico governor signs GDB debt restructuring

Some 65,000 Puerto Ricans left their bankrupt U.S. island commonwealth last year. A group of private bankers are moving the other way. They’re increasingly opening offshore banks known as International Financial Entities, which were created by a Puerto Rican law in 2012. There are 44 IFEs now, with 18 opening in the past year, according to data compiled by the U.S. territory’s financial regulator. “Just in the last six months, we’ve probably closed seven deals for international banks,” says Ryan Christiansen, president of Christiansen Commercial Real Estate, a brokerage based in Puerto Rico that leases office space. Tax experts attribute at least part of the influx to a little-known loophole made possible by the IFE structure. It lets non-U.S. account holders put money in Puerto Rico anonymously and potentially avoid taxes at home even as they benefit from the stability and safety of the U.S. That’s become increasingly attractive because of a new global financial-disclosure system ta

A federal control board overseeing the finances of Puerto Rico's government said Wednesday that it will investigate the causes of the island's  economic crisis  as well as examine how its debt was issued and probe disclosure and selling practices. The announcement comes as government officials seek to restructure a portion of the $70 billion public debt in a process similar to bankruptcy following multimillion-dollar defaults that have angered creditors. Board members said they will form a special committee that will appoint an independent investigator, and the findings will be made public. The board said the investigation aims to restore fiscal balance and help  Puerto Rico  re-enter the capital market. It is unclear what happens next if significant findings emerge and whether any federal government agencies would become involved. The board did not respond to a request for additional comment. Puerto Ricans affected by austerity measures amid a 10-year  recession and t