Puerto Rico’s Governor announced that the country’s Government Development Bank will be unable to pay most of the $422 million debt payment that is due on Monday . The US territory has accumulated public debt in excess of $70 billion, outpacing its gross national product.
RBC Capital notes:
Abertis has announced the extension of the Metropistas concession (Puerto Rico) by 10 years in return for a $115m payment to the grantor and some investment in more gantries and changes to managed lane economics.
For much of the past decade, Crispin Odey has been waiting for inflation to rear its ugly head. The fund manager has been positioned to take advantage of rising prices in his flagship hedge fund, the Odey European Fund, and has been trying to warn his investors about the risks of inflation through his annual Read More
We think managed lanes within the PR-22 road are a small portion of the total revenue of the asset and thus changes to the sharing of revenues are unlikely to be material
MKM Partners opine:
It remains to be seen what if anything can be done today to allow PR’s GDB to avoid a default. The press story we saw about the bond insurers possibly coming in to help PR is an interesting twist, but not really a big surprise to us. This intervention is normal business practice for the insurers and has been part of its tools to assist troubled municipal issuers. The story seems to suggest that the insurers would “invest” in a short investment in GDB to allow it to make the May 1 payment. This is exactly what happened with the PREPA bonds last July 1.
See the following visualizations to highlight a number of relevant economic indicators regarding PR’s debt crisis.
PR’s Public Debt
PR’s Public Debt as a Percentage of GNP
Unemployment Rate of PR
Puerto Rican GDP Per Capita Growth Rate