Puerto Rico Public Finance misses Aug. 1 appropriation bond payments

By Caroline Salls

Pittsburgh, Aug. 3 – Puerto Rico Public Finance Corp. did not make the payment of principal or interest for the Aug. 1 debt service due on its series 2011A, series 2011B and series 2012A commonwealth appropriation bonds, according to a notice filed Wednesday by bond trustee U.S. Bank, NA.

The trustee said the Puerto Rico Oversight, Management, and Economic Stability Act (Promesa), which was signed into law by President Barack Obama on June 30, implements a stay that may affect bondholders’ rights.

On July 25, Public Finance Corp. sent U.S. Bank a letter certifying that an operating budget for the Commonwealth of Puerto Rico for the current fiscal year had been adopted by the commonwealth’s legislature and approved by the governor of Puerto Rico.

However, the trustee said the budget was adopted without provision for payment of the bonds. As a result, no draw on a letter of credit issued by the Government Development Bank for Puerto Rico was possible.

The trustee said it sent Public Finance Corp. and the bank a reservation of rights letter related to Puerto Rico’s debt moratorium and Promesa.

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