Puerto Rico,
facing absolute devastation after Hurricane Maria barreled through
last week, desperately needs immediate funding to restore critical
infrastructure, particularly its hobbled electric grid. The entire
island — home to over 3.5 million American citizens, roughly
equivalent to the state of Connecticut — lost power, and satellite
imagery shows how little electricity has come back. This affects not
only electricity and telecommunications service but access to clean
water, as many pumping stations run on the same grid.
A group of
bondholders, who own a portion of Puerto Rico’s massive $72 billion
debt, has proposed what they are calling relief — but in the form
of a loan. So they’re offering a territory mired in debt the chance
to take on more debt.
The
announcement came after The Intercept spent two days reaching out to
51 of Puerto Rico’s known creditors, asking them if they would
support a moratorium or cancellation of debt payments for the island,
given the humanitarian crisis. Prior to this announcement, only three
of the 51 creditors had so much as donated relief funds to charity or
offered sympathy for island residents, all of them banks who actually
have to face consumers, and so are a bit more adept at handling
public relations. No creditor had supported debt relief.
Of the 51
creditors contacted by The Intercept, only Citibank, Goldman Sachs,
and Scotiabank have pledged no-strings-attached money for Puerto Rico
and other Caribbean islands, in the form of donations to relief
organizations totaling $1.25 million. Citi has also waived certain
fees for citizens within disaster zones.
Puerto
Rico’s other creditors contacted by The Intercept would not say
whether donations were made by their firms or their top executives,
which include some of the richest people on earth. Holders of Puerto
Rican debt have included John Paulson, who got rich betting against
the housing market during the financial crash; Jeffrey Gundlach of
DoubleLine Capital, who in 2015 called Puerto Rican debt his “best
idea” for investors; and Marc Lasry of Avenue Capital Group and
co-owner of the Milwaukee Bucks NBA team.
Full
report:
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