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Broke Puerto Rico Pays Out $120 Million In Christmas Bonuses

Tyler Durden's picture




 

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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Mon, 12/21/2015 - 10:38 | 6948634 NoPension
NoPension's picture

Hard working government employees. They earned it.

Mon, 12/21/2015 - 10:44 | 6948666 Neil Patrick Harris
Neil Patrick Harris's picture

Are you surprised government only exists to serve and preserve itself? Just like any other mega corporation...

Mon, 12/21/2015 - 10:48 | 6948671 hedgeless_horseman
hedgeless_horseman's picture

 

 

¡Viva la revolución deuda!

Mon, 12/21/2015 - 10:49 | 6948680 BandGap
Mon, 12/21/2015 - 12:32 | 6949174 jcaz
jcaz's picture

That's why they're Puerto Ricans.......

Mon, 12/21/2015 - 12:33 | 6949178 knukles
knukles's picture

Never ever tell a Puerto Rican window washer that you want them "Spic and Span"

Mon, 12/21/2015 - 13:28 | 6949464 Four chan
Four chan's picture

every one of these ricans worth their salt are in on the big grift.

Mon, 12/21/2015 - 10:52 | 6948681 Croesus
Croesus's picture

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. 

Mon, 12/21/2015 - 11:44 | 6948934 Troll Magnet
Troll Magnet's picture

Ahhhhh Latinas...So hot when they're young. So not when they age.

Mon, 12/21/2015 - 11:48 | 6948956 Normalcy Bias
Normalcy Bias's picture

It's like the wheels just fall off at around 30.

Mon, 12/21/2015 - 12:34 | 6949189 knukles
knukles's picture

And the moles pop up all of a sudden all over with the hairs ....   reminds me of the Reptilians shape shifting .....
Fucking amazing.

Mon, 12/21/2015 - 13:30 | 6949473 Four chan
Four chan's picture

lol i dont like black women or latinos mexicans of any knd, they are gross.

Mon, 12/21/2015 - 12:36 | 6949194 GhostOfDiogenes
GhostOfDiogenes's picture

"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.

Mon, 12/21/2015 - 12:40 | 6949223 Not My Real Name
Not My Real Name's picture

"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."

Mon, 12/21/2015 - 10:58 | 6948717 all-priced-in
all-priced-in's picture

Most government employees I know - work harder trying to avoid doing any actual work than they do actually working.

 

 

 

 

 

 

 

Mon, 12/21/2015 - 11:07 | 6948771 NoPension
NoPension's picture

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.

Mon, 12/21/2015 - 11:04 | 6948746 NoDebt
NoDebt's picture

NoPension- it takes a while for the ZH'ers to get that you are doing satire.  You have to work at it consistently.

Mon, 12/21/2015 - 11:08 | 6948779 NoPension
NoPension's picture

Hehe!

Mon, 12/21/2015 - 11:27 | 6948855 TalkToLind
TalkToLind's picture

Ain't that the truth.

Mon, 12/21/2015 - 11:06 | 6948765 swamp
swamp's picture

Serious corruption and international money laundering. Population: 3 million. Debt: 72 billion. Bonuses 120 million. The numbers are cartoons.

Mon, 12/21/2015 - 16:54 | 6950386 B.S.D.
B.S.D.'s picture

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?

Mon, 12/21/2015 - 11:09 | 6948786 BullyBearish
BullyBearish's picture

No, we the U.S. taxpayers paid out the Christmas bonuses as we do with EVERY bailout of anyone...worldwide

Mon, 12/21/2015 - 12:09 | 6949068 MrNosey
Mon, 12/21/2015 - 10:38 | 6948635 Government need...
Government needs you to pay taxes's picture

But at least thousands will be able to afford new 'Puerto Rican Tuxedos' for the annual Puerto Rican Day Parade in New York City.

Mon, 12/21/2015 - 10:39 | 6948637 NoDebt
NoDebt's picture

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.

Mon, 12/21/2015 - 10:40 | 6948644 GhostOfDiogenes
GhostOfDiogenes's picture

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."

Mon, 12/21/2015 - 10:41 | 6948654 CHoward
CHoward's picture

"If they knew shit, they wouldn't be Puerto Ricans."

 

**********

Now that's just too funny!

Mon, 12/21/2015 - 10:40 | 6948646 CHoward
CHoward's picture

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. 

Mon, 12/21/2015 - 11:48 | 6948959 Omen IV
Omen IV's picture

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

Mon, 12/21/2015 - 10:41 | 6948651 Seasmoke
Seasmoke's picture

Try this yourself BEFORE declaring bankruptcy and see what happens. 

Mon, 12/21/2015 - 10:44 | 6948660 Lorca's Novena
Lorca's Novena's picture

And when the serfs receive nohing while watching Antionette go shopping, well, we all know how that ends... soon I hope.

Mon, 12/21/2015 - 10:45 | 6948669 youngman
youngman's picture

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...

Mon, 12/21/2015 - 10:53 | 6948699 NoPension
NoPension's picture

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.

Mon, 12/21/2015 - 10:46 | 6948670 The Ram
The Ram's picture

Why not pay a bonus when underwritten by the US Treasury!

Mon, 12/21/2015 - 10:48 | 6948676 Pumpkin
Pumpkin's picture

It takes a lot of work to keep lies and scams going.  Bonuses are in order.

Mon, 12/21/2015 - 10:51 | 6948692 yogibear
yogibear's picture

Socialism keeps paying dividends.

Obama is leading the way to total bankruptcy.

Mon, 12/21/2015 - 10:54 | 6948695 rejected
rejected's picture

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.

Mon, 12/21/2015 - 10:54 | 6948702 lordbyroniv
Mon, 12/21/2015 - 10:55 | 6948709 SoDamnMad
SoDamnMad's picture

"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.

Mon, 12/21/2015 - 10:58 | 6948722 Promethus
Promethus's picture

Bad PR.

Mon, 12/21/2015 - 10:59 | 6948725 orez65
orez65's picture

"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.

Mon, 12/21/2015 - 11:02 | 6948739 roadhazard
roadhazard's picture

I'm just shocked.

Mon, 12/21/2015 - 11:07 | 6948767 commie
commie's picture

Good move. No point in letting the money go to the vulture hedge fund  gang. 

Mon, 12/21/2015 - 11:08 | 6948778 goldsaver
goldsaver's picture

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!

Mon, 12/21/2015 - 11:11 | 6948789 TheObsoleteMan
TheObsoleteMan's picture

Puerto Rico didn't pay shit for those Christmas bonuses, the American taxpayer did. GIVE THEM THEIR INDEPENDENCE THAT THEY KEEP THREATENING US WITH!

Mon, 12/21/2015 - 11:11 | 6948793 firstdivision
firstdivision's picture

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. 

Mon, 12/21/2015 - 11:19 | 6948823 Cloud9.5
Cloud9.5's picture

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.

Mon, 12/21/2015 - 11:21 | 6948832 TalkToLind
TalkToLind's picture

Es para los niños.

Mon, 12/21/2015 - 11:25 | 6948848 rsnoble
rsnoble's picture

Never a bad day to be a public employee!  Talk about fucking parasites!

Mon, 12/21/2015 - 11:30 | 6948873 Tortuga
Tortuga's picture

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.

Mon, 12/21/2015 - 11:57 | 6949009 10mm
10mm's picture

Well it's the .01%, the FSA and Gov't employee. Id say the .01, the real owners are top in line.

Mon, 12/21/2015 - 12:09 | 6949065 HamRove
HamRove's picture

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!"

Wed, 12/23/2015 - 10:45 | 6956125 Wannabe_Oracle
Wannabe_Oracle's picture

"Don't piss me off Art"

 

Big ups for the funniest dang Christmas movie refer/quote.

Mon, 12/21/2015 - 13:20 | 6949429 directaction
directaction's picture

Why do mainland Americans have pay for that blood sucking third world dump? 

Mon, 12/21/2015 - 13:29 | 6949466 Jethro
Jethro's picture

I'm sure that money will be put to good use with 1 in 7 Puerto Ricans using illegal narcotics.

Mon, 12/21/2015 - 14:02 | 6949638 pashley1411
pashley1411's picture

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.

Mon, 12/21/2015 - 14:05 | 6949652 cheech_wizard
cheech_wizard's picture

Puerto Rican financial terrorists. We must begin bombing them immediately.

 

Mon, 12/21/2015 - 15:16 | 6949955 Lucky Leprachaun
Lucky Leprachaun's picture

No surprise. No matter how indebted a Government is they'll always look after themselves first. 

Mon, 12/21/2015 - 17:12 | 6950456 FIAT CON
FIAT CON's picture

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.

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