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Puerto Rico To Default On Some Bonds January 1 - Live Feed
Puerto Rico governor Alejandro Garcia Padilla is set to address the island's debt problem at a press conference on Wednesday.
- PUERTO RICO SAYS IT WILL DEFAULT ON SOME DEBT DUE JAN. 1
- PUERTO RICO TO MISS $1.4 MILLION DUE ON PFC BONDS DUE JAN. 1
- PUERTO RICO TO MISS $35.9 MILLION DUE ON PRIFA BONDS
- PUERTO RICO TO MAKE JAN. 1 GENERAL OBLIGATION DEBT PAYMENT
Nearly $1 billion comes due on Friday, some $330 million of which is GO debt. Because a full payment is next to impossible, Padilla must decide who gets paid and who doesn't. Live feed:
And the reaction in the monolines:
* * *
Background
In what’s starting to feel a bit like the Greek saga that unfolded over the summer, Puerto Rico is facing another “D-Day” on January 1 when nearly $1 billion is due to creditors.
For those unfamiliar with the story, the commonwealth is struggling to crawl from under a debt pile that sums to about $70 billion but has thus far been unable to wrench concessions from Congress on restructuring in bankruptcy.
Earlier this month, the island struck a deal with the monolines that will let a previously agreed restructuring for around $8 billion in PREPA debt go ahead, and while some hope that could serve as a kind of template for the rest of Puerto Rico’s obligations, analysts and government officials alike think that’s unlikely given the complexity involved.
On December 1, Governor Alejandro Garcia Padilla used a revenue clawback mechanism in order to make a $354 million payment. The end-around effectively allowed Padilla to divert funds from other agencies that have issued bonds in order ensure the government could make good on its GO debt. A default on the GO portion (around $330 million) of what comes due on Friday would trigger a wave of messy litigation and is a situation Padilla wants to avoid at all costs.
One source with GO debt exposure who spoke to Reuters said debtors usually advise creditors ahead of time when they plan to default, and Puerto Rico had not indicated a default to GO creditors.
But given the fact that Padilla indicated earlier this month that making the full payment at the first of January would be all but “impossible,” someone isn’t going to be getting their money.
Height Securities’ Daniel Hanson - who last month warned of social unrest if the government stops making payroll - says the island will likely miss payments on $35 million in Infrastructure Finance Authority (PRIFA) bonds, $1.4 million in PFC bonds, as well as possibly $91 million on bonds at its buildings authority (PBA).
For its part, Ambac (which insures Puerto Rico's debt) now says the revenue clawbacks the island used to make the December 1 payment are "illegal." According to Bloomberg, the insurer is now demanding taxes received in fiscal 2016 up to the statutorily required limit of $117m be moved to Sinking Fund and says as much as $94m in Rum Taxes securing PRIFA bonds were diverterd before governor’s order, a contention Padilla denied in today's presser.
Perhaps Padilla put it best earlier this month when he said the following: "...the vast number of creditors with differing interests across all issuing entities [will] result in negotiations that are lengthy, costly and chaotic."
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Collateral and Cross-Default
I knew you knew the key questions.
Padilla 2016
I thought they were "fixed" a month ago!!!
My dogs were fixed seven years ago.
Believe me, from personal experience, Nothing's Ever Fixed in Puerto Rico
ROSALIA
Puerto Rico,
You lovely island . . .
Island of tropical breezes.
Always the pineapples growing,
Always the coffee blossoms blowing . . .
ANITA
Puerto Rico . . .
You ugly island . . .
Island of tropic diseases.
Always the hurricanes blowing,
Always the population growing . . .
And the money owing,
And the babies crying,
And the bullets flying.
I like the island Manhattan.
Smoke on your pipe and put that in!
OTHERS
I like to be in America!
O.K. by me in America!
Ev'rything free in America
For a small fee in America!
RIPS
It's not a "default" unless the writers of credit default swaps say it's a "default." If the debtor says something like: "Someday, I'll pay some of it back, if you give me the money," it's not really a "default." I think that's how it works.
Hey, Puerto Ricans can sell an abandoned base of ruthless shelling and bombardment as a vacation getaway, maybe they've learned a bit from us Yanks. Vieques: get a nuclear tan!
They obviously need a MUCH larger government and for the government to be giving away WAY more free shit. Krugman says that that is a guaranteed path to prosperity.
Warburg Pincus ever able to dump their majority stake in the largest insurer of this paper?
*correction* - not majority, just largest shareholder
Ask Timmmay.
http://www.bloomberg.com/news/articles/2013-11-17/tim-geithner-to-join-l...
"We defaulted some folks...."
Dammit Welfare, you stole my thunder!
"Some bonds got defaulted..."
;-)
Happy New Year!, (or at least better than the last one...)
Myself and the wife and kids are in PR right now, flew in in Christmas Eve leave on New Year's Day. It's kick ass if you know what to expect. 3 bedroom 3 bath house with private pool and a pool table on the patio in a gated neighborhood. $160 a night, can't beat it. Yeah it's dirty and you have to watch your shit but my 16 and 8 yo are having a blast. Large lunch today with beers for the Mrs. and I, soda for the kids... $16.50. Mid 80's everyday. Just stay away from the large cities, who wants to vacation around Americans anyway? They embarrass me. Today struck up a conversation with a local guy my age (mid,late 40's) who has 2 sons in the USMC he was impressed we were hanging with the locals and not at some lame ass resort where the gringos go. Anyway, it's cheap and pleasant. It is 2nd world Caribbean but hey it beats the Midwest this time of year.
Hmm, I wonder if this budget showfall was a topic of discussion when the PR gubbermint paid out over $120,000,000 in Christmas bonus' just last week... Fuck 'em, they are all multi-generational welfare dependents... Time to repossess the entire island, put the lying government in a boat and drag them out to sea without a paddle...
(cue the music)
"I wanna forgive in America..."
Puerto Rico Finance Minister explains their Plan B
https://www.youtube.com/watch?v=DDIQNO8PS8M&feature=em-share_video_user
well at least the government employees got $120m in christmas bonuses, so they got that going for them, which is nice.
Yes no cuts in the bonus pool...in fact I bet it was moe than last year
Well they did have to spend a lot of time going over how they were going to default.
You heard the man without the money there would be "social unrest", no one wants to piss off a Puerto Rican mailman..
Printing presses never run out of other peoples money to devalue...unless you are the example to be set.
IRS is there...they may get what detroit , baltimore and chicago wont.
RIPS
Nothing ever gets fixed...kick the can down the path save a few more days,months,years before the unaviodable day of default
I'm alarmed. Will this adversely affect Superbowl Cincuenta in anyway?!?!?!?!
As the numbers of this debacle are greater than two digits it's possible most football fans will miss the enormity of the situation.
Maybe people would understand the magnitude if they converted all of the dollar figures to Roman numerals.
What would Fred Sanford have to say about this?
"I'M COMIN' TO JOIN YA, HONEY !" (in this case Honey is Greece)
Are we witnessing a pattern here?
1. Private corporations create deals with respective governments that obligate them to a debt they will never be able to pay off.
2. Governments default on debt.
3. Corporations move in and create a corporate fascist state (as is happening in Greece) AND IT'S ALL LEGAL.
There is an aweful lot of fascism manifesting itself in the world today and it's only getting worse.
A Global Totalitarian Authoritarian Fascist Militarized Police State. Milton Friedman's wet dream but on a Global Scale. Chile was just a trail run.
Sheeet! I hopes dey still gets der Bammyphones K, yo!
Puerto Rico = a more corrupt and more hispanic version of NYC. They have plenty of Guzmans aka tribe members.
This was all known from the beginning. Just like Greece. Now the only question is who gets to own Puerto Rico and who is going to pay for it.
Not a question. The US owns it and the US taxpayer will pay for it.
LOL
Sounds like the taxpayers should own it, then, hehe.
Que fucking lastima.
You and I
No hot latina babe pic?
They could easily balance the budget while laying down...
Never mind.. full faith and credit... sell physical assets and buy USD's and T's... it will never happen here... so forth and so on...
Dios mio! Por favor Tio Sam, dame sus dinero ahora!
A couple million here and there? Thats just a rounding error on an avg daily Wall St trading desk.
Who would have ever lent money to PR?...or any government...ever...?...why...?
Because it is the law! Various entities must hold the very safest of assets...you know...government bonds.
Once again the politics of the monetary system rears its ugly head. The people want their stuff and so governments give it to them. Then the system goes sideways and the currency itself goes bad. This cycle is now almost a millennia old. Avoid it. Save your excess wealth in something real. Gold is best but if you are really wealthy and can't source enough gold...well, if you are in that category you would not be listening to me.
but, but, but ... THERE'S YIELD!!!
So... you're saying this debt is held by all of those conservative pension/insurance managers?
socialist wet dream default and spend it all over again
Ah fuck it. Put it on my tab.
Puerto Ricans are about get Greeced hard in the ass.
Print more and move on to the next one.
But the government employees got their yearly bonus, so everything is cool, right?
Head of the trough, shame their pensions just went poof.
Ambac, lulz
Their mouth has been writing checks their ass can't cash methinks. That's okay, they'll find (or create) some loophole and not have to pay. They're good at that.
Un cisne negro?
Can't wait to hear how Moodys and S&P have put Puerto Rico on credit watch for possible downgrade... oh wait! they are going to print IOU's? Well then, clearly that would make them investment grade, just like California
If the squid owns any they will get Upgrayedd. The double d is for a double dose of imf pimpin'.
The Boys at AMBAC are Wall Street players. They knew the risks when they insured this steaming, stinking pile of bovine defecation known as Puerto Rico bonds. Memo to El jefe De Puerto Rico, tell the boys at AMBAC "Quien paga? Usted paga, Gringo!" Thats why Bonds are insured and thats why you get your premiums!! Let Wall Street play "patata caliente" with AMBAC. www.ambac.com
Bullish !!!
What I want to know is whether it's PC to diss PR, or do you need a PR team to remain PC when you call the island PR?
WTF is going on?!
why would anyone put 5 cents into PR when Cuba is there with a clean Balance Sheet and claims of 100's of Billions in $$$$ against the USA for illegal sanctions which will turn into public works expenditures - modern systems no legacy antiquated systems to support and pay for - everything brand new to come
Anything you want from PR can be had in Cuba cheaper and better managment
SHUT DOWN PR and let it turn to chaos - come back in ten years when there is no one left
Hey I got a Solution.. we kick all the Puerto Ricians off of the Island, and rename it..
take a while for the smell to clear, but somebody will Buy It
yeah yeah i know racist son of a Bitch... haven't been knifed in a while have you.
bullish
And in other news, Twizzlers candy still sucks.
.... and why this isn't a big deal? Let's see - oh yeah, most of the debt issued by PR prior to 2008 which WAS AAA is insured by AGMC. If any of these bonds go belly up, the only hurt party is Berkshire Hathaway.
Mrs. Sees is Buffett in drag.
That entire island is Free Stuff Army.
This is why Obola will bring all his ilk here.
'Course, that will piss off 100,000 of Obola's Syrian guests that think they have FSA dibs.
Fred Sanford to Julio:
"El payoh yoh debtoh amigo..."
ZH, Tylers, I do scratch my head ..
You are apparently clueless about Lee Wanta (some say the preeminent expert on macroeconomics). But on top of that, you are appear to be clueless of the likes of Bill Holter and Jim Sinclair. Metals brokers know everything. They have to. Their competition is other commodities. Stocks, bonds, real estate, precious jewels, collectables, currencies, etc.
Do ask Lee Wanta why he personally possesses 2000 metric tonnes of gold bullion. Purchased, pennies on the dollar from the former USSR. At current market price, in excess of $90 billion. Which outside of his total net worth of 32.8 TRILLION (none of it paper wealth) still makes him richer than Bill Gates, or any Arab sheik of your choice. Or any combination thereof.
Anyways, back to Holter. If you pay attention to his most recent conversation with Greg Hunter (who has had the pleasure of conversations with all the big guys [with the exception of Wanta to date]), Hunter mentions PR, and how missing one payment coming up could well be the first domino to drop. Holter, does not even blink ..
http://usawatchdog.com/2016-prediction-collapse-caused-by-fraud-debt-bil...
The key quote in this conversation (besides the PR quip) is probably this ..
Happy New Year everyone ..
In addition to Sinclair's Be Prepared, keep yourself furthered armed. When Sinclair here speaks of disruptions, lasting up to 30 to 60 days, Gibby (for Lee Wanta), Dr. Jame's et al likewise are talking about the adjustment and/or transition period coming (3/24/15 teaser and full discussion.)
https://app.box.com/s/hfgvcqg7gqh7i27at6sv53ywu87lwarp (Read Me First)
http://www.veteranstoday.com/2014/07/30/the-coming-return-of-the-real-us...
Sinclair is an asshole, charletan, cheat, fraud and liar...hows is your TRX doing?
Oh for the love of GOD DO IT ALREADY! JUST FUCKING DO IT! I'm SO SICK of hearing this "We're gonna default...We swear, we'll do it...We won't make this payment...ok, we'll make THIS payment, but we won't make the next one...We swear..."
Shut UP! You, and Greece, at least a dozen other nations, the US Congress, college students, tens of thousands of municipalities across the country, most of the states, all of the banks, the majority of households and almost every single individual on the PLANET owes SOMEBODY SOMETHING that they cannot afford to repay. What difference is it if the debt is 100 billion, or 2 goats? If you owe 2 goats but have no goats it's the same as not having 100 billion.
It's DEBT itself that is the problem, not the amounts of debt. The amounts only put the stories into the news, because the numbers are so mind-blowingly BIG. But make no mistake about it, THIS IS WHAT DEBT LOOKS LIKE.
We can complain about Puerto Rico, and Greece, etc, not living within their means, whatever. But when you make minimum payments on your Visa card, and roll the rest over to the next billing cycle, YOU are Greece...YOU are Puerto Rico. You are doing, on a micro-scale, exactly what these folks did, and it got away from them. Just like it will eventually get away from you, which you fear it will in your heart of hearts. ALL people with debt fear not being able to service it, of having it get out of control. They swear they will 'catch up' next month, but of course they never do, something always comes up.
Well, something came up for Puerto Rico, and now they are in trouble. NOT because they were any more irresponsible than any of us as individuals, but because THIS IS WHAT DEBT ALWAYS LEADS TO!
They go down harder and faster because of their great size, but make no mistake about it fellow debt-slaves. We are ALL going down the same rat-hole. We might like to differentiate between 'good' debtors and 'bad' debtors, but in fact thee is no way to responsibly handle debt, therefore there can BE no irresponsible debtors. They can either pay, or they can't, and a sense of responsibility won't put a nickel into anyone's pocket. Nor do creditors accept it as payment...:-)
Since there IS no way to responsibly 'handle' debt (except to avoid it altogether), any widespread use of it in your economy would be foolish. But to BASE your economy on it, create your currency with it, is beyond stupid. Stupid on a scale hard to wrap your mind around...
When I say "your economy", it's because I don't feel like I'm part of this economy...I'm on the outskirts, drawn along against my will by forces too great to resist. However, all they can do is drag me along, they can't make me carry anything for them. So I avoid their banks, their credit cards, their 'loans', their payroll taxes, sales taxes, their consumer goods...I pay the unavoidable, but that's it, and I challenge when I can. I will NOT contribute, it will ALWAYS cost you way more to hold me than you will ever get out of me.
What a dumb-ass economy this is! It would be almost funny to read about a country doing these things, but to have to LIVE through it is NOT entertaining...*sigh* We all get our brief turn on this ride called Life, and these people are wasting MY limited time with their bullshit!
Honest money would fix this. What are the chances they bring it back? "On a long enough timeline...."
Because a full payment is next to impossible, Padilla must decide who gets paid and who doesn't.
Yeah right . . . . his decision on "who gets paid" and who doesn't will be totally objective . . . no politics involved in that decision whatsoever.
BOHICA!!!