国会研究服务部-波多黎各公共债务：积累与重组（英文）-2021.5-61页_2mb

Summary of Puerto Rico's Public Debts: Accumulation and Restructuring

Core Content

Puerto Rico's public debts, totaling over $70 billion when PROMESA was enacted in 2016, are undergoing one of the largest debt restructuring processes in U.S. history. The restructuring is being managed by the Financial Oversight and Management Board (FOMB), established under PROMESA, and involves litigation and negotiations with various stakeholders, including the Puerto Rican government, hedge funds, bond insurers, and other creditors.

The restructuring process has been significantly delayed due to natural disasters (Hurricanes Irma and María in 2017), political instability, and legal complexities. The goal of the restructuring is to ensure Puerto Rico can access credit markets at reasonable rates, which is a condition for the Oversight Board's termination.

Main Categories of Public Debt

Puerto Rico's public debts fall into four main categories:

1. General Obligation (GO) Bonds: Backed by the Commonwealth's full faith and credit, these are the most significant category of debt.
2. COFINA Bonds: Sales-tax-backed bonds, which were a key part of the island's fiscal strategy. COFINA was established in 2006 to issue bonds backed by half of the sales tax revenue.
3. Public Corporation Debt: Includes debts of entities like the Puerto Rico Electric Power Authority (PREPA), Highways and Transportation Authority (HTA), and others.
4. Local Government Debt: Issued by municipalities and smaller entities.

Key Events in Debt Restructuring

• 2013-2016: Puerto Rico faced severe fiscal pressures, including a budget crisis and declining credit ratings. The situation was exacerbated by the Great Recession and the lack of a viable restructuring mechanism.
• 2016: PROMESA was enacted, creating the Oversight Board and two restructuring paths: one under the Bankruptcy Code (Title III) and another similar to sovereign debt procedures (Title VI).
• 2017: The Oversight Board began restructuring efforts, but progress was slowed by Hurricanes Irma and María.
• February 2019: A federal court confirmed the restructuring plan for COFINA bonds, reducing the total debt from $17.6 billion to $12 billion.
• February 2021: The Oversight Board announced a revised plan for restructuring GO bonds and other central government debts, which was filed with the Title III court.
• May 2021: The Title III court scheduled a hearing to evaluate the adequacy of the disclosure statement for the restructuring plan.

Major Viewpoints and Concerns

• Debt Accumulation: Puerto Rico's postwar economic strategy of industrialization led to high debt levels. The lack of a sustainable revenue model and reliance on tax-backed bonds contributed to the crisis.
• Pension Liabilities: Unfunded pension obligations reached over $40 billion by 2016, creating a significant fiscal burden.
• Hedge Funds and Insider Trading: Hedge funds played a prominent role in Puerto Rico's debt restructuring. Accusations of insider trading arose during negotiations, prompting calls for investigations and legislative changes.
• Legal and Ethical Issues: The restructuring process involved complex legal battles, particularly around the priority of COFINA and GO bonds. The Oversight Board faced ethical scrutiny due to potential conflicts of interest and the role of financial advisors.
• Federal Involvement: PROMESA is seen as a model for how the federal government might respond to fiscal crises in other states and localities. The report highlights the need for federal policies to address municipal debt structures and improve transparency in debt negotiations.

Key Information

• Debt Size: Over $70 billion when PROMESA was enacted in 2016.
• COFINA Debt: Represented nearly 25% of total public debt and was restructured in 2019.
• GO Debt Restructuring: An agreement was reached in February 2021, with a disclosure hearing scheduled for July 13, 2021.
• Professional Fees: Estimated to exceed $1 billion, making this one of the most expensive debt restructurings in U.S. history.
• Legislative Efforts: Several bills were introduced in the 116th Congress to amend PROMESA, focusing on transparency and ethical standards.
• Market Reactions: Puerto Rico's debt restructuring has affected bond prices and trading volumes, with significant market volatility observed during the process.

Figures and Tables

• Figure 1: Shows the accumulation of Puerto Rico's public debt from 1960 to 2017.
• Figure 2: Provides a breakdown of Puerto Rico's public debt as of July 31, 2016.
• Figure 3: Illustrates the holdings of senior COFINA bondholders.
• Figure 4: Displays price trends for selected Puerto Rico bonds.
• Figure 5: Projects economic growth rates for Puerto Rico and the U.S. from 2020 to 2025.
• Table 1: Compares the February 2021 PSA with the October 2020 Board proposal.

Conclusion

Puerto Rico's debt restructuring under PROMESA is a pivotal moment in U.S. fiscal policy, reflecting the challenges of managing public debt in a territory with unique legal and economic status. The process has involved significant legal, political, and financial complexities, and its outcome may serve as a precedent for future federal interventions in state and local fiscal distress.