NEW YORK – Puerto Rico expects to have the money needed to make a January payment due on its general-obligation bonds, a government official said on Monday.
Victor Suarez, the chief of staff for Governor Alejandro Garcia Padilla, told reporters in San Juan that the island will pay its debt bills as long as it has adequate funds to do so. He said the commonwealth borrowed $400 million from some government funds last week and is seeking to raise another $400 million to finance the government’s operations after November.
“We anticipate we will have the cash flow to make the January payment,” Suarez said.
The comments come a week after Puerto Rico defaulted for the first time, when it paid only $628,000 of a $58 million interest and principal bill on bonds sold by its Public Finance Corp. Puerto Rico’s securities have tumbled in price since June, when Garcia Padilla said the U.S. territory cannot afford its $72 billion of debt because of the teetering economy.
The default increased speculation that Puerto Rico may renege on other obligations to conserve cash. Last week, Puerto Rico separately disclosed that it temporarily suspended monthly payments into the fund that covers the payments on its $13 billion of general-obligation bonds.
Puerto Rico general obligations maturing in 2035 traded for an average of 70.4 cents on the dollar Monday to yield 11.9 percent. The price is up from 70.2 cents on Friday, according to data compiled by Bloomberg.
Garcia Padilla said in June that the commonwealth was unable to repay all that it has borrowed and he would seek to put off some debt payments to give it time to mend its finances. Officials have said they aim to draft a restructuring plan by Sept. 1.
Puerto Rico’s debt crisis has been building for years as the commonwealth borrowed to cover budget gaps. The administration has delayed tax rebates and payments to suppliers to preserve money for health and safety programs for its residents.
Standard & Poor’s said that Puerto Rico’s decision to default may jeopardize the government’s ability to raise funds needed to cover its bills until tax collections flow in.
Suarez said the commonwealth has received interest from those who may still be willing to lend.
“Bond buyers are still interested,” Suarez said. “We remain in conversations.”
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