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Broke Puerto Rico Pays Out $120 Million In Christmas Bonuses
Last week, the market got some good (and “good” is a relative term here) news with regard to Puerto Rico’s debt crisis.
The commonwealth - which you’ll recall is struggling to crawl from beneath a debt pile that sums to $70 billion - managed to strike a deal with PREPA’s creditors and the monolines that will see bondholders and lenders accept losses of 15% with the insurers putting up a $450 million surety bond.
PREPA owes more than $8 billion and the deal will represent the largest restructuring in muni history. As we noted on Friday, the island hopes the agreement will serve as a framework for discussions with other creditors, but Puerto Rico isn't out of the woods yet by any stretch of the imagination.
“The [PREPA] process was relatively smooth because the interests were fairly aligned on both sides,” Triet Nguyen, a managing director at NewOak Capital, tells Bloomberg. “When you get to the rest of the debt complex it’s a much messier process.”
As Bloomberg goes on to note, Puerto Rico could default before Congress returns from their New Year recess. The commonwealth needs to make $957 million of interest payments on January 1 and some of what’s due is GO debt.

The Catch 22 for Governor Governor Alejandro Padilla is that the more debt is sucessfully restructured, the less inclined Congress will be to allow bankruptcies. “The argument that’s been made in favor of Chapter 9 is that it’s the only means through which an organized, non-chaotic approach to Puerto Rico’s debt crisis can be put in place,” Mark Palmer, a managing director at BTIG LLC told Bloomberg by phone, before noting that the PREPA deal “would argue otherwise.”
Here's Padilla, underscoring just how messy things are likely to get: “The vast number of creditors with differing interests across all issuing entities would result in negotiations that are lengthy, costly and chaotic. Access to legal, broad restructuring authority would allow us to undertake these in an orderly manner.”
Additionally, the use of a revenue clawback to pay some $354 million that came due on December first suggests creditors may have to fight for scarce funds. "While Puerto Rico’s general-obligation bonds are given priority under its constitution, others are backed only by specific taxes or revenue," Bloomberg adds. "Creditors are gearing up for a fight over who gets paid first."
All of this raises questions about how the island will manage to provide public services and make government payrolls without risking a default on GO debt (which would trigger paiful litigation). As we noted last month, Padilla could face social unrest in the event people stop getting paid."Puerto Rico’s liquidity strains are 'serious' and will likely create 'greater levels of public unrest' into year-end," Height Securities analyst Daniel Hanson cautions, adding that the "island’s Treasury Single Account likely has negative cash balance, making it 'nearly impossible' to meet all government payroll obligations."
Well as we head into the holidays, bondholders will be less than pleased to learn that Puerto Rico has just paid out $120 million in Christmas bonuses. Here's Reuters:
Debt-ridden Puerto Rico started paying Christmas bonuses to public employees on Sunday and aims to complete the process within the next three days, the commonwealth government said.
It had been unable to confirm for weeks if it could meet the Dec. 20 deadline required under a 1969 law for the seasonal bonus. The payments total about $120 million, government officials said earlier this month.
Bonuses will be paid to government officials and regular employees of at least six months, and irregular employees who had worked at least 960 hours in a 12-month period.
We imagine this will temporarily keep the villagers from storming the castle with torches and pitchforks but make no mistake, the creditors are going to be beating down the door come January, and they're going to want a whole lot more than $120 million.
Additionally, we wonder how many of the employees receiving bonuses were involved in the fiscal mismanagement that got the island into its current debt conundrum.
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Hard working government employees. They earned it.
Are you surprised government only exists to serve and preserve itself? Just like any other mega corporation...
¡Viva la revolución deuda!
Still a goodie.
https://www.youtube.com/watch?v=DDIQNO8PS8M
That's why they're Puerto Ricans.......
Never ever tell a Puerto Rican window washer that you want them "Spic and Span"
every one of these ricans worth their salt are in on the big grift.
Puerto Rico has a female-dominated society. That could be part of the problem.
"I just spending money on clothes for Papi, and shit, dat's all".
Dated a Puerto Rican girl once. Pretty to look at, but the future was bleak, once I met her mother. Definition of old bag, and she was in her 40's.
Ahhhhh Latinas...So hot when they're young. So not when they age.
It's like the wheels just fall off at around 30.
And the moles pop up all of a sudden all over with the hairs .... reminds me of the Reptilians shape shifting .....
Fucking amazing.
lol i dont like black women or latinos mexicans of any knd, they are gross.
"Ahhhhh Latinas...So hot when they're young. So not when they age."
Bullshit. They are meztizos and they are genetic hybrids, that's why they age badly. Mixing of two distinct genetic groups makes the people created from that into a hybrid mix.
My brother married one and talk about stupid. She wasn't too smart herself.
"Just like any other mega corporation..."
Corporations do not have the power of taxation to suck wealth from those it "serves." And if the quality of the products a corporation sells are rejected by the citizens it goes out of business. Governments have no such worries. So, no, it is not "just like the mega corporations."
Most government employees I know - work harder trying to avoid doing any actual work than they do actually working.
There is an art to looking busy. You have to admire how they pull it off.
When we need a building permit, we are conflicted. Is it better when they are " slow" or " busy"?
If they are a little busy, they get overwhelmed, and it takes forever.
If they are slow, they recycle that application and hang onto it as long as possible. You don't want to be that guy.
NoPension- it takes a while for the ZH'ers to get that you are doing satire. You have to work at it consistently.
Hehe!
Ain't that the truth.
Serious corruption and international money laundering. Population: 3 million. Debt: 72 billion. Bonuses 120 million. The numbers are cartoons.
wow, they could have just gave out the 72 Billion to the people & taxed the shit they bought with it & serviced the payments due with that for a while, no?
No, we the U.S. taxpayers paid out the Christmas bonuses as we do with EVERY bailout of anyone...worldwide
Don't you just love socialism......
http://beforeitsnews.com/conspiracy-theories/2015/12/as-events-spiral-ou...
But at least thousands will be able to afford new 'Puerto Rican Tuxedos' for the annual Puerto Rican Day Parade in New York City.
When you're that far in the hole you just keep spending until the end. You can go broke owing $1 or $100 Trillion, the results are the same.
Imminent destruction?
Who cares!
Full speed ahead captain!
Btw, anyone see that base the USA has built into a mountain there?
Best line from 'The Departed'
" Ricans think they know everything. If they knew shit, they wouldn't be Puerto Ricans."
"If they knew shit, they wouldn't be Puerto Ricans."
**********
Now that's just too funny!
Puerto Rico is far more concerned about the 'uncivilized' citizens storming the gates, literally then they are about their more adroit and proper creditors who will just hand them a lawsuit. $120 million to stop a revolution? Not a bad deal.
Exactly!
after the election is the new Muni-Bankruptcy Law - which will wipe out - state / county / city / contracts to include pensions
The beleagured Property Owners will be getting their properties back. The end of an era is at hand
Try this yourself BEFORE declaring bankruptcy and see what happens.
And when the serfs receive nohing while watching Antionette go shopping, well, we all know how that ends... soon I hope.
government emploees get a bonus for doing a good job...no it was a law passed in 1969....so everyone gets them I bet....Socialism at its best...
This is 2015. You can't pick who gets a bonus for doing an extra good job. That would be humiliating to the other ...eh....er...ah...workers. So...everybody gets a bonus!
It's like the Trophy all the kids now get. Just for participating.
Plus, who cares? They'll get bailed out. Look at who the bond holders are.
Owe the bank a thousand, they own you.
Owe the bank a million, you own the bank.
It's all so surreal anymore. NOTHING goes down. No one loses. No pain, ever. It's a good time to be alive.
Why not pay a bonus when underwritten by the US Treasury!
It takes a lot of work to keep lies and scams going. Bonuses are in order.
Socialism keeps paying dividends.
Obama is leading the way to total bankruptcy.
Nothing compared to Detroit spending 300 million on a new sports stadium.
And I wouldn't be surprised to learn they quietly paid bonuses as well. Spending / Stealing OPM is the one thing government parasites are good at.
WELCOME TO YOUR FUTURE:
https://www.dumpert.nl/embed/6695011/28ec7b05/
"Bonuses will be paid to government officials and regular employees of at least six months, and irregular employees who had worked at least 960 hours in a 12-month period"
So their compensation is based upon everyone getting a bonus. Not in any way performance based. Hold it tight because you may not see any salary for a long, long time.
Bad PR.
"An empire can only survive if it is a profit center"
Donald Trump
"Get rid of the losers"
Donald Trump
Therefore, grant Puerto Rico its independence.
I'm just shocked.
Good move. No point in letting the money go to the vulture hedge fund gang.
Padilla and the rest of the elected officials don't have a choice. The bonuses are not really bonuses at all. They were negotiated as part of the pay package with the unions and by law everyone gets them. Not paying those "bonuses" would be like social security checks not going out in the US. There would be riots in the streets, the government would shut down (now that would be a good thing) and the people in power would never get elected to anything again.
Now, defaulting on bond holders? Who cares!
Puerto Rico didn't pay shit for those Christmas bonuses, the American taxpayer did. GIVE THEM THEIR INDEPENDENCE THAT THEY KEEP THREATENING US WITH!
Reminds me of broke banks that stole from tax payers so that their 'loved' employees could get that pool in their backyard that they wanted.
The last bubble to pop is government. Why do we keep whining about taxes? The government cannot collect enough to pay its bills. Everything is paid for by a mouse click. The only reason to keep IRS is as an enforcement tool and it employs thousands. So hide and watch and enjoy the ride. Everthing is good until it isn't.
Es para los niños.
Never a bad day to be a public employee! Talk about fucking parasites!
Well, they learned from the best. 123 million$ is chicken feed compared to what is being stolen in DC cum Wall Street, by the gangs, before the Donald or Senator Cruz takes over.
Well it's the .01%, the FSA and Gov't employee. Id say the .01, the real owners are top in line.
Puerto Rico will have the Hap Hap Happiest Christmas since Bing Crosby danced with Danny "Fucking" Kay. And when Santa squeezes his fat ass down that chimney, he's gonna see the jolliest bunch of assholes this side of the nuthouse!"
"Don't piss me off Art"
Big ups for the funniest dang Christmas movie refer/quote.
Why do mainland Americans have pay for that blood sucking third world dump?
I'm sure that money will be put to good use with 1 in 7 Puerto Ricans using illegal narcotics.
For the 2 remaining people who do not yet realize that "government" is merely a confidence game to separated you from your hard-won property.
Puerto Rican financial terrorists. We must begin bombing them immediately.
No surprise. No matter how indebted a Government is they'll always look after themselves first.
Tell all of those .gov workers to step right up for their bonuses, but first sit here at the Guitine for only a moment, then you will get your bonus.