Puerto Rico needs debt restructuring authority: U.S. Treasury Secretary

Thu Dec 24, 2015 11:28am EST
 
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By Megan Davies

NEW YORK (Reuters) - Puerto Rico needs debt restructuring authority under U.S. bankruptcy law to address what the Obama Administration has previously called an "escalating crisis", U.S. Treasury Secretary Jack Lew, said on Fox Business Network TV on Thursday.

U.S. House of Representatives Speaker, Republican Paul Ryan, has instructed committees to work with Puerto Rico's government to come up with a solution to the island's financial problems and said this should be crafted by the end of March.

The House is expected to hold a Jan. 5 hearing on the U.S. territory's financial problems.

Puerto Rico has some $70 billion in debt, a poverty rate of 45 percent, and has been in recession for nearly a decade. On Jan. 1 it faces roughly $1 billion in debt payments and officials have warned of a default on some of that paper.

With debt of more than $8 billion and inefficient operations, PREPA had been one of the crucial public agencies to restructure, and remained separate to a wider restructuring of the island's debt which officials have been attempting.

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On Wednesday Puerto Rico's electric power utility PREPA said it has agreed a deal with creditors, including holdout bond insurers, on a restructuring of its debt, a move seen as key to fixing the island's faltering economy.   Continued...

 
U.S. Treasury Secretary Jack Lew gives a news conference at the 2015 IMF/World Bank Annual Meetings in Lima, Peru, October 9, 2015. REUTERS/Mariana Bazo