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Investors will be watching Puerto Rico this weekend for details of a restructuring plan for its $72 billion debt load, as government officials face a Sunday deadline to deliver a draft of the plan to the governor. The deadline kicks off what could be a busy week for the struggling island commonwealth, which defaulted on bonds from one of its public agencies earlier this month. Under previous agreements, the Puerto Rico Electric Power Authority, bondholders and other creditors are facing a Tuesday cutoff to shake hands on a restructuring program for the electric utility. It isn’t clear whether the government will release a draft version of its broader restructuring plan on Sunday, and analysts caution that any draft will likely be subject to heavy revisions. Daniel Hanson, an analyst at Height Securities, estimated in a recent research note that it could be up to two weeks before the full plan is officially released. Earlier this week, Puerto Rican newspapers reported on some details...

The old adage that this it takes money to make money assumes a whole new meaning when its comes to Puerto Rico. The commonwealth and its main electric utility have spent more than $60 million in legal and advisory fees from firms such as Cleary Gottlieb Steen & Hamilton LLP and Millstein & Co. over the past two years as the governor and public finance officials seek to restructure the island’s $72 billion debt burden, according to a review of contracts by Bloomberg News. And the billable hours will probably keep adding up. Commonwealth officials plan to unveil a proposal next week expected by analysts to seek a reduction in debt payments that may lead to protracted negotiations with creditors. Unlike Detroit, Puerto Rico localities cannot file for Chapter 9 bankruptcy protection, leaving the island without a clear legal framework to resolve its debt crisis. “It makes sense they would need to rely on consultants more than the average issuer in a similar situation,”...

The plan seeks to help restructure the country's debt by cutting $1B in operating expenses and increasing revenues $1B © 2015 Benzinga.com. Benzinga does not provide investment advice. All rights reserved. Puerto Rico Draft Economic Plan Calls For Consolidating/Closing Schools, Cutting University Subsidies & Healthcare Spending; Would Eliminate Christmas Bonus And Vacation Days

Federal Reserve Bank of New York President William C. Dudley urged Congress to pass a bill that would allow some agencies of Puerto Rico to file for Chapter 9 bankruptcy. “I think that would be helpful, because it could help facilitate an orderly restructuring of their debt,” something that is “probably going to turn out to be necessary,” Dudley, whose district includes Puerto Rico, said at a press briefing in New York Wednesday. While such restructuring might not be easy, the risk of Puerto Rico’s troubles spreading to the rest of the country is “pretty low,” because the problems are unique to the island and already reflected in the prices of the commonwealth’s securities, Dudley said. Puerto Rico is in a deep slump and its economic outlook remains uncertain, though employment appears to have steadied in recent months, Dudley said in his prepared remarks Wednesday. “Puerto Rico’s weak economy coupled with a fiscal crisis means its economic outlook remains uncertain as it struggl...

Puerto Rico's unemployment rate fell to 11.9 percent in July, down 0.70 percent from the previous month, the Labor Department said. The unemployment rate has fallen by 1.8 percent since July 2014, the department said in a statement. The island's labor force participation rate was at 39.5 percent last month, down 0.20 percent from June and 0.10 percent relative to July 2014. A total of 992,000 people were employed in Puerto Rico in July, down by 3,000 from June and by 10,000 compared to July 2014. The release of the latest employment report comes days before the government unveils its fiscal adjustment plan, in which officials will lay out their spending and investment policies for the next five years. Puerto Rico's government is trying to figure out how to deal with the island's $73 billion debt amid a slumping economy. EFE Puerto Rico's unemployment rate falls to 11.9 pct.

On Sept. 1 the state-owned Puerto Rico Electric Power Authority (Prepa) faces a deadline for restructuring more than $8 billion in debt. If it can’t come to an agreement with creditors, a previous forbearance agreement will expire and the company will face default. In that event, bondholders could be expected to go to court to begin the process of receivership, as the bond contracts stipulate. This high-stakes negotiation comes when Puerto Rico is asking Congress to give its municipalities and public agencies access to the chapter 9 bankruptcy protection the 50 states have. A Prepa default would be disruptive and possibly increase the odds that Congress will agree. But failure on the part of the utility to negotiate in good faith also could backfire and jeopardize support in Washington for giving Puerto Rico chapter 9 protection. It could also reduce sympathy on the mainland for the write-down of other Puerto Rico debt issues—which total some $63 billion—that Gov. Alejandro García P...

Revelers arrived in cars sporting the American flag and wore clothes in red, white and blue as they celebrated the anniversary of Puerto Rico's pro-statehood political party with deafening salsa music and speeches. Like many others worried about the U.S. territory's future, those rallying Thursday night in the coastal town of Manati believe that statehood can help pull it out of a nearly a decade of economic stagnation. "Puerto Rico has to become a state," insisted 63-year-old celebrant Norma Candelario. With unemployment at 12 percent, and the public debt reaching $72 billion, advocates for making the Caribbean island the 51st state say the economic woes are strengthening their arguments. As a state, Puerto Rico's municipalities and public utilities would no longer be prohibited from restructuring their debts through bankruptcy. It would also receive more of certain kinds of federal funding that other states get. "The crisis has made us more visible world...

TRANSCRIPT IVETTE FELICIANO: For two days, Chief Paxx Moll has been preparing farm-to-table meals at the San Juan restaurant El Departamento de la Comida, which means “the department of food.” When I cook, everyone is a VIP, Moll says. You give some of your soul and love to the person. Moll works with a small network of Puerto Rican farmers for the restaurant’s organic, signature dishes, like their falafel-plantain fritters and coconut flatbread. PAXX MOLL: I think its fresh food with Puerto Rican essence and it’s all locally grown, which makes it uber Puerto Rican. IVETTE FELICIANO: Yet, getting quality ingredients from Puerto Rico is not easy. on the lush, tropical island, more than 85 percent of what people eat is imported. Seafood, meats and staples like rice and beans and coffee mostly come from the United States, neighboring Latin American countries and even China. The main reason: Puerto Rico’s agricultural sector is dismal, representing less than one percent of the isl...

TRANSCRIPT CHRIS BURY : The financial crisis in Puerto Rico is clear in the emergency room of San Juan’s biggest hospital, Centro Medico, where patients line the halls, because there are not enough nurses to treat them or rooms to put them. Doctor R osalie Barrios is the head of emergency medicine here. ROSALIE BARRIOS : There is no beds available in the hospital, so they have to wait here for a bed. CHRIS BURY : And how long does that take? ROSALIE BARRIOS : Several days? CHRIS BURY : Several days. ROSALIE BARRIOS : Yes. To maybe a week, yes. CHRIS BURY : The week-long wait is a symptom of Puerto Rico’s bigger troubles: a third of the territory’s debt is due, in part, to crippling health care costs. With more than 60 percent of residents qualifying for government-subsidized healthcare, hospitals rely on that money to provide services. But the U.S. Government reimburses Puerto Rico at a much lower rate than states get. And now, a dramatic hike in sales taxes — a new austerity ...

Summary The Newfoundland near-default in the 1930's provides some interesting historical perspective to Puerto Rico's current troubles. Despite the dramatic escalation of Puerto Rico's indebtedness, recent trends in the growth of both the internal and external deficit provide a positive indicator for Puerto Rico's future. Analogies with Newfoundland are strengthened by the "liquor tax indicator", almost identical for the two economies. Unlike Newfoundland in the thirties, however, Puerto Rico may be able to grow itself out of its current problems.         Are things that bad for Puerto Rico? Default-o-mania fear is sweeping the world, a little bit like Trump-o-mania. First Greece, now Puerto Rico. With the devaluation of the yuan, these bearish signals are probably more ominous symbolically than in reality. But symbols are extremely important and may carry the day in these troubled times. Are things that bad for Puer...

People who advocate for large governments usually view them as a “progressive” tool that impels the rich to help the poor. But when said governments get too bloated and inefficient—as they inevitably seem to—they become something that everyone must support. This is now happening in Puerto Rico, which recently addressed its fiscal problems by jacking up the sales tax. This is a regressive move that could hurt the island’s bottom line, and undoubtedly its many poor people. On July 1, Puerto Rico   raised   its Sales and Use Tax (SUT) from 7% to 11.5%, through leadership from the legislature and Democratic governor Alejandro Garcia Padilla. 10.5% of this is imposed by Puerto Rico’s Department of Treasury, and the additional percent goes to municipalities. Together, the 11.5% rate is over two percentage points higher than Tennessee’s, which has the   next highest  state rate at 9.45%, and over one point above Chicago, which will soon have the   highest rate   f...

Additionally, new transitory amendments to the existing sales and use tax (SUT) provisions for the performance of services between businesses (i.e., business to business) and designated professional services (e.g., legal services, accounting services) listed in the SUT provisions will be effective October 1, 2015. These changes are in addition to the changes implemented on July 1, 2015. With such a rapidly changing indirect tax regulatory environment, it is important for companies with operations in Puerto Rico to understand, plan and prepare for these developments. Are you prepared for how these changes may impact your operations in Puerto Rico? We invite you to register for our webcast to gain more insight into the business implications of the upcoming indirect tax changes taking place in Puerto Rico. The following topics will be discussed: Background on the current indirect tax system within the context of the Puerto Rican government’s fiscal crisis SUT changes taking effec...