Puerto Rico's Governor Padilla proposed his budget for 2017, cutting debt service of $1.8 billion, without any documentation showing the gravity of the Island's cash flow situation. This occurred the day before a Congressional Rescue bill was approved by a House sub-committee. Without supporting cash flow projections, could the Governor be bluffing that he has insufficient cash to pay general obligation debt?
In any case, his action is irresponsible. Last June 29, when the Governor stated that Puerto Rico's debt was "unpayable", it was akin to the Captain of the S.S. Puerto Rico heading straight for a reef, and the Captain taking his hands off the helm. This latest action can be compared to the same thing, except now he has ordered "full speed ahead".
Director of Credit Analysis
Stoever Glass & Co. Inc
P: (800) 223-3881