NEW YORK, Feb. 14, 2018 — A group of creditors (the “Creditors” or “we“), which collectively holds a substantial portion of Puerto Rico's outstanding debt, released the below statement today in response to the most recent version of the Commonwealth's Fiscal and Economic Growth Plan (the “Plan” or “FEGP“):
Although Puerto Rico's creditors have differing perspectives on a number of issues related to the ongoing restructuring, we share a unified view that a pragmatic, transparent and growth-focused policy agenda is critical to the island's recovery. This view has only strengthened since the devastation caused by Hurricanes Irma and Maria exacerbated the already difficult economic situation on the island. Unfortunately, we believe the Commonwealth's recently proposed FEGP represents a major step backward on the road to recovery. The Plan fails to provide a credible basis on which to restructure the island's debt, while completely lacking a foundation for revitalizing the local economy and restoring access to the capital markets.
Perhaps the most troubling issue with the FEGP is that it was developed in an opaque manner, essentially relying on outputs from underlying analyses that have never been made public. This flies in the face of the Commonwealth's commitment to transparency and undermines recent guidance from House Natural Resources Committee Chairman Rob Bishop, who stated “[i]t is imperative the Oversight Board and Governor fully integrate those who hold the debt into the development of these [fiscal] plans, thereby guaranteeing accuracy and transparency in the underlying assumptions.”
As long-time lenders to the Commonwealth and its instrumentalities, we are committed to supporting the economic, commercial and social revitalization of Puerto Rico. Now is the time to lay the foundation for how private capital will augment federal aid and local revenues on the road to recovery. We believe an objective and thorough analysis of the Plan reveals a number of fundamental flaws that need to be addressed before moving forward, including:
Together, we call on the Commonwealth and FOMB to carefully evaluate and address our valid concerns. Although this week's revised FEGP was a small step forward, addressing these issues in a comprehensive manner will ensure Puerto Rico is put on a long-term path to growth and prosperity.
About the Signatories
The group of creditors responsible for this release is comprised of Ambac, Assured, the COFINA Seniors Coalition, National Public Finance Guarantee Corporation, the Mutual Fund Group, Syncora, the Puerto Rico Funds, and individuals living in Puerto Rico and the mainland. Collectively, the group holds or insures a substantial portion of Puerto Rico's outstanding debt.
Greg Diamond (for National Public Finance Guarantee Corporation)
Greg Marose (for the COFINA Seniors Coalition)
212-446-1874 / 201-936-4126
Sean Silva (for Ambac)
1 Excludes the effect of the “Medicaid Cliff”. Including the projected expenses of the Medicaid Cliff results in a per capita expense increase of 5% per year over the projection period.
2 “The Commonwealth of Puerto Rico, Update on Fiscal and Economic Progress, FY 2014 Q1 Investor Webcast – October 15, 2013,” gdb-pur.com/documents/UpdateonFiscalandEconomicProgressWebcast-Final.pdf, Page 57.
3 “Joint World Bank-IMF Debt Sustainability Framework for Low Income Countries” https://www.imf.org/en/About/Factsheets/Sheets/2016/08/01/16/39/Debt-Sustainability-Framework-for-Low-Income-Countries.
4 “An Update on the Competitiveness of Puerto Rico's Economy,” https://www.newyorkfed.org/medialibrary/media/outreach-and-education/puerto-rico/2014/Puerto-Rico-Report-2014.pdf, Page 27.
*Puerto Rico has been classified as a high-income economy that can support a higher level of sustainable debt service by the New York Federal Reserve.
SOURCE Group of Puerto Rico's Creditors