Bondholders Stunned As Puerto Rico Finds $4.4 Billion In Outstanding Debt “Unconstitutional”

Jon Alternative Media, Blogosphere, Government

After Puerto Rico defaulted on its $422 million debt payment in May, governor Padilla begged congress to step in and help out, which happened shortly thereafter when a House committee cleared legislation that provided Puerto Rico with a way forward on restructuring its debt.
As it turns out, on the day the House announced that it planned on taking up the Puerto Rico bill next week, a 17 member audit commission found that two debt issues worth $4.4 billion of the $72 billion in debt outstanding were unconstitutional.
Said otherwise, the government may now just declare the bonds invalid. It’s a handy development for governor Padilla, since the two debt issues were expected to default on July 1. Also helpful is the fact that it would be one less item for Padilla to worry about since he proposed a budget for 2016-2017 that provides for only $209 million of the $1.4 billion in current debt service cost.
As MarketWatch explains

This post was published at Zero Hedge by Tyler Durden – June 3, 2016.