Bondholders searching for signs Puerto Rico can rebuild and ultimately emerge from its fiscal challenges found a flicker of hope recently.
In a visit to Puerto Rico on Friday, U.S. House Speaker Paul Ryan promised additional aid for the struggling commonwealth and said the United States was committed to helping for the “long haul.”
“This isn’t the last aid package,” Ryan said in San Juan.
“This is the second in more to come,” he said. “When we get that final analysis, the administration will submit yet again to Congress a request for another aid package to respond to these longer-term problems.”
Addressing Puerto Rico’s “longer-term” problems
The “longer-term problems” Ryan referred to is, presumably, a nod to Puerto Rico’s fiscal woes and efforts to rebuild its economy.
Plagued by a decade-long recession, $74 billion in debt and other issues, a panel known as PROMESA (Next Move On Puerto Rico Muni Debt: Oversight Board) was established last year to oversee Puerto Rico’s spending and the restructuring of its debt.
And then the hurricanes hit.
The direct blow from hurricane Maria caused widespread devastation across Puerto Rico. Just days before, the commonwealth also contended with hurricane Irma, which severely damaged several Caribbean islands and knocked out power to 1 million people in Puerto Rico, about 60,000 of whom were still without power when Maria struck.
Currently, about 85% of residents remain without service.
A day before Ryan’s visit, the House approved a $36.5 billion disaster aid package for Puerto Rico, Texas, Florida and the U.S. Virgin Islands. The measure included $4.9 billion in loans to help Puerto Rico pay its immediate expenses.
In September, Congress approved $15.3 billion in aid to areas hit by hurricanes Harvey and Irma.
Future aid for Puerto Rico
Coming on the heels of President Trump’s mixed messages, the pledges of assistance by Ryan and others in Congress and the administration could be welcome news for bondholders. Indeed, through aid to rebuild its infrastructure, some analysts even see the seeds of a wider recovery.
Though it remains to be seen whether any of this federal aid will benefit beleaguered bondholders, the political will to help Puerto Rico get back on its feet in the aftermath of the storms could be an essential first step in ultimately addressing its financial issues.
