Madagascar Development

The size of the UK’s plans for offshore wind became clearer this week, when the government gave consent for the largest offshore wind farm in the world. Dogger Bank Creyke Beck will sit in shallow water in the middle of the North Sea, 131 kilometres (81 miles) from the UK coast. It will cover an area of 8660 square kilometres, only slightly smaller than the country of Puerto Rico, which is 8870 square kilometers, and almost exactly the same size as Corsica. The project forms part of the UK’s ambitious offshore building program. The UK is the world leader in offshore wind, and already has more offshore installed capacity that the rest of Europe combined. Share Tap image to zoom Dogger Bank Creyke Beck will have an installed capacity of up to 2.4 gigawatts, enough to power 1.8 million households, and supply around 2.5% of all UK electricity. It would be the second largest power generator in the UK after the Drax coal-fired station in North Yorkshire, which produces th...

Puerto Rico on Thursday was hit with its second debt downgrade in a week as the U.S. territory's government pushes to overhaul its tax system to help generate more revenue amid an economic recession. Moody's Investors Service downgraded $48 billion worth of Puerto Rico debt, warning that the island might default on its debt in the next two years. "Tax reforms now before the legislature, which are uncertain in their timing and their results, further signal a rising degree of political risk that could ultimately cause outcomes unfavorable to bondholders," the agency stated. Moody's also said that slow economic growth has led to a drop in tax revenues that could worsen Puerto Rico's liquidity issues. Standard & Poor's downgraded the island's general obligation bonds last week. Both downgrades seem to indicate a breakdown in communication between the territory's government and credit rating agencies, said Triet Nguyen, founder of Axios Advisors L...

Puerto Rico Municipal Bond Price Putters Most individuals think of warm locations such as Puerto Rico as an escape from the snowy winter experienced in parts of the country, but the financial climate remains stormy in Puerto Rico. Puerto Rico bonds remain far from tranquil following a court ruling just over one week ago that struck down a restructuring law. The law would have opened the door for Puerto Rico’s government to reduce its debt burden by restructuring government agency issued bonds, such as Puerto Rico Electric Power Authority (PREPA) and Puerto Rico Highway. This potential prepackaged default option appears unworkable. Puerto Rico municipal bond price volatility picked up following the strike down of the restructuring law as the market began to price in the prospect of a broader default. Puerto Rico general obligation (GO) bond prices fell sharply with the 30-year bond yielding more than 10% for the first time ever according to Municipal Security Rulemaking Board (MSRB) tra...

A bill that could give Puerto Rico's financially burdened public agencies a chance to restructure their debts will get a hearing before a key congressional committee reports Reuters. Other U.S. cities such as Detroit and Stockton have made similar moves under the section of U.S. bankruptcy law. The House Judiciary Committee plans to hear the bill in the coming weeks. The committee is chaired by Virginia Republican Rep. Bob Goodlatte. The proposed bill will allow Puerto Rico's power, water and highway authorities to reorganize their debt under chapter nine of the U.S. Bankruptcy Code. The proposal is sponsored by Puerto Rico's non-voting representative, Pedro Pierluisi. Of the three public agencies, Prepa, Puerto Rico's power authority, is facing the worst conditions. Prepa has accumulated $9 billion in debt and is currently in negotiations with bondholders. Pierluisi introduced the bill in July after the island's lawmakers enacted local legislation granting the ...

Government Development Bank (GDB) President Melba Acosta has been traveling a lot lately, as she heads Gov. Alejandro García Padilla's administration efforts to put out financial fires wherever they erupt, whether it is the global oil-price meltdown that has muddied the market for Puerto Rico bonds, or proposed federal legislation that could kill the island's main investment lure. She has been meeting with Wall Street investors about structuring a $3 billion bond deal before the end of this fiscal year on June 30, when the GDB and the wider commonwealth government will run perilously low on cash. At the same time, she has been keeping tabs on the restructuring process now underway at the Puerto Rico Electric Power Authority (Prepa), which is widely expected to default on its $9 billion debt load. Also on Acosta's agenda is keeping the administration of President Barack Obama up-to-date on the commonwealth government's financial situation, while talking to U.S. Treasu...

Washington, DC —Resident Commissioner Pedro Pierluisi today re-introduced legislation that would empower the government of the U.S. territory of Puerto Rico to authorize one or more of its government-owned corporations, if they were to become insolvent, to restructure their debts under Chapter 9 of the U.S. Bankruptcy Code.  The bill is H.R. 870 and is entitled the Puerto Rico Chapter 9 Uniformity Act . State governments themselves are not eligible to adjust their debts under Chapter 9 of the Code.  Rather, only a “political subdivision or public agency or instrumentality of a State”—called a “municipality” in the Code—can adjust its debts under Chapter 9.  Another provision in the Code provides that the term “State” includes Puerto Rico, “except for the purpose of defining who may be a debtor” under Chapter 9. Congress has thus empowered each state government to authorize its public utilities or instrumentalities to adjust their debts under Chapter 9, but has not ...

Puerto Rico legislators prepared to hold public hearings on a proposed 16 percent value-added tax after the governor filed a measure Wednesday that revealed more details about efforts to overhaul the U.S. territory's tax system. Gov. Alejandro Garcia Padilla submitted the 1,435-page bill just hours after meeting with business owners and other private sector groups to talk about the proposed value-added tax. The tax aims to boost government revenue in the U.S. territory, which is mired in a deep economic recession. Income tax revenues are the government's main source of income, and Garcia noted in a speech Tuesday night that many professionals including doctors, lawyers and engineers report net incomes less than $20,000. The government is estimated to take in about 56 percent of tax revenues that it should be collecting, losing some $800 million annually. Taxing consumption instead of certain types of income will help generate more revenue, Treasury Secretary Juan Zaragoza told...

Critical elements of Puerto Rico’s plan to avert financial disaster are in jeopardy, after a federal judge struck down a law that allowed the government to restructure certain debts. The law, known as the Recovery Act, was meant to give Puerto Rico’s public corporations protections similar to bankruptcy. Unlike American cities like Detroit, which used federal bankruptcy law to sort out its finances, Puerto Rico, a United States commonwealth, is not permitted to declare bankruptcy. In his decision on Friday night, Judge Francisco A. Besosa of the United States District Court in San Juan, Puerto Rico, said the Recovery Act overstepped federal law, and he enjoined commonwealth officials from enforcing it.  The government said on Monday that it planned to appeal the judge’s ruling. Without the Recovery Act, government officials worry that attempts to gain concessions from creditors and unions at public corporations like the deeply indebted Puerto Rico Electric Power Authority will dis...

Updated, 9:50 p.m. | Investors in billions of dollars of Puerto Rico bonds secured a major legal victory when a federal judge ruled that the commonwealth’s recently enacted debt-restructuring law was unconstitutional. In the decision Friday night, Judge Francisco A. Besosa of the United States District Court in Puerto Rico said the Puerto Rico Public Corporations Debt Enforcement and Recovery Act was void and enjoined commonwealth officials from enforcing it. The recovery act was passed by Puerto Rico lawmakers last summer to enable the commonwealth to overhaul the debts and labor contracts of the island’s struggling public corporations, including the Puerto Rico Electric Power Authority, which is known by its acronym, Prepa. Like states, Puerto Rico cannot seek protection from creditors under federal bankruptcy law, leaving the commonwealth with few ways to straighten out the finances of troubled agencies like Prepa, which supplies electricity to the island’s roughly 3.6 million peop...

(Reuters) - Hopes of an orderly resolution to Puerto Rico's debt crisis suffered a heavy blow after a court voided the island's restructuring law, raising fears it may be heading for a longer, messier debt overhaul. Late on Friday a U.S. federal judge ruled that the U.S. commonwealth's so-called Recovery Act, which made some of Puerto Rico's agencies eligible for court-supervised debt restructuring, violated the U.S. constitution by allowing a state government to modify municipal debt. "This decision will ultimately result in a resolution being dragged out over a longer period of time, having the administrative costs incurred eat into the ultimate recovery for the bondholders," said Tom Metzold, a senior portfolio advisor at Eaton Vance, which holds various insured Puerto Rico bonds. Puerto Rico is expected to appeal the ruling, kicking off lengthy litigation with a hard to predict outcome and possibly delaying for months the matter's final resolution. ...

Feb 6 (Reuters) - A U.S. federal judge voided a controversial law that allows some of Puerto Rico's public corporations to default on their debt, saying in a ruling late on Friday that the U.S. commonwealth's so-called Recovery Act contravenes federal bankruptcy law. The decision in the U.S. District Court has implications for around $20 billion of debt potentially affected under the act. That includes $9 billion of debt outstanding at the Puerto Rico Electric Power Authority (PREPA), which is currently in restructuring talks with bondholders. "The Recovery Act is preempted by the federal Bankruptcy Code and is therefore void pursuant to the Supremacy Clause of the United States Constitution," Judge Francisco Besosa wrote in the ruling. "The Commonwealth defendants, and their successors in office, are permanently enjoined from enforcing the Recovery Act." Puerto Rico, which is struggling with debts of more than $70 billion, passed the Recovery Act in Jun...

A proposal in President Obama's budget to impose a minimum tax on U.S.-controlled foreign income may curb investment in Puerto Rico as the commonwealth struggles to spur economic growth and improve its finances. "Any potential change in the current tax regime on foreign corporations will affect Puerto Rico's competitiveness in the manufacturing sector," and "could undermine the island's economic recovery," said Gustavo Vélez, chairman of Inteligencia Económica, a consultancy based in Puerto Rico. The proposal, which is aimed at producing revenue for an increase in infrastructure spending in the U.S., would impose a 19% minimum tax on controlled foreign corporations operating outside the country. It would also apply a 14% tax effective on money already earned and still held overseas. Money taxed under the proposal wouldn't be subject to further U.S. taxes. Under section 901 of the current United States tax code, a subsidiary of a U.S.-based corporat...

Gov. Alejandro Garcia Padilla's administration has launched a campaign to persuade Puerto Ricans of the advantages of its proposed tax reform plan, which includes a value added tax and aims to rein in pervasive tax evasion. Implementation of a VAT is the most important step toward boosting tax collection, Rafael Hernandez Montañez, chairman of the finance committee of the lower house, told Efe. The campaign seeks to familiarize Puerto Ricans with a new tax that is the Garcia Padilla administration's main effort on the fiscal front. The governor set a Feb. 15 deadline to have a bill introduced in the Legislative Assembly. If passed by lawmakers, the VAT would replace and be well above the current 7 percent sales tax. Under the indirect VAT proposal, each party involved in the "value added" chain will pay its predecessor a portion of the tax based on the price paid, but it will receive from its successor the portion of taxes according to the price invoiced. The go...

Puerto Rico's leading media group openly demanded Tuesday, in an unusual step bordering on the historic, the restructuring of a public debt that it says is really twice the official figure. "Puerto Rico is broke" is the eloquent front-page headline Tuesday of El Nuevo Dia, the daily with the most readers in the U.S. commonwealth and which dedicates a 20-page special to proving that the Caribbean island's accumulated debt is double the generally accepted figure of $73 billion. The editorial talks about a $167.46 billion debt, a "frightening" figure obtained by adding up interest on the debt and the deficit accumulated by retirement and public health programs. "You don't need to be an economist from Harvard to understand that this debt is unsustainable," says the editorial entitled "Restructuring, there's no other choice," and which bluntly states that "Puerto Rico's viability as a country is at stake." This move b...