The Fiscal Oversight Board requests action by Congress

Wednesday, Oct 4, 2017

By Joanisabel Gonzalez
Source: El Nuevo Día

Excerpt of Hernando Montero of Stoever Glass, quoted in El Nuevo Día:

"Public pressure

According to Hernando Montero Salazar, Director of Credit Analysis for the fixed income firm Stoever Glass & Co., the outrage caused by President Trump's statements about the situation in Puerto Rico and the recent criticism over the delayed emergency response, are a more encouraging situation for the island to receive a federal aid package.

"The level of the press and the political pressure that has fallen on the legislators, for what has happened with Puerto Rico, has completely changed the landscape not only to provide urgent help, but to formalize a comprehensive package of aid," said Montero Salazar, who regretted that President Trump had hinted that to assist Puerto Rico with its humanitarian crisis had to be fulfilled with the payment of public debt.

To El Nuevo Día questions about the scope of that aid package, Montero Salazar said he has seen spending estimates between $30 and $60 billion, but said there is no current way to currently know how much Congress could grant and under what terms.

Montero Salazar said, however, that the money is likely to be subject to some sort of control over the path Puerto Rico has shown in managing its finances.

In that sense, the municipal debt expert anticipated that, in the future, there could be conflicts between the role that the Fiscal Oversight Board will play after the disaster and the government, for the use of the funds allocated to the island.

Back to the negotiating table

According to Montero Salazar, another effect that will have to grant federal aid to Puerto Rico, will be seen in the judicial process that is followed to renegotiate the island's debt.

According to the analyst, the disaster brought by Hurricane Maria caused that the money that, in principle, was contemplated in the Fiscal Plan for the payment of the debt could be reduced to "zero", for now.

Montero Salazar explained that given the critical liquidity situation facing the government, creditors will likely return to the negotiating table in the judicial process established by PROMESA. If, in fact, Congress aids Puerto Rico, it will help the recovery of the island, a positive factor for the current debt held by creditors." 

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