Puerto Rico starts biggest ever US bankruptcy process

RT – May 17, 2017

The US territory of Puerto Rico has begun a historic bankruptcy proceeding. On Wednesday, a US federal judge will start to sort out the Caribbean Commonwealth’s $123 billion debt in a San Juan court.

The issue could take years to resolve, as investors scramble to recover as much as they can on their bonds.

Puerto Rico’s debt is still trading at elevated levels against what the island’s authorities have put aside for payment under its financial recovery strategy.

Investors are raising concerns about whether they will be able to recoup at those prices.

The Commonwealth is seeking to restructure over $70 billion in debt, from multiple agencies with another $45 billion in underfunded pension liabilities. However, analysts throw into question the chance of getting that level of recovery.

“The 25 percent may be what the Commonwealth identified as available to cover debt service, but it doesn’t necessarily mean that will be the ultimate recovery,” said Shaun Burgess, portfolio manager and lead trader for Puerto Rico strategy at Sarasota, Florida-based Cumberland Advisors, as quoted by Reuters.