The Board requested the cancellation of the debt to Judge Laura Taylor Swain. (semisquare-x3)
The Board requested the cancellation of the debt to Judge Laura Taylor Swain. (GFR Media)

Washington - According to Resident Commissioner Jenniffer González, when requesting the cancellation of $6 billion in Puerto Rico´s constitutional debt to court, the Oversight Board must establish the responsibility of the firms that recommended that to the island's authorities.

However, for González there might be some attempt from the Board overseeing the island´s finances and the Unsecured Creditors Committee (UCC) to look for a “specific amount” that could be cut from the island´s public debt. 

The Board and the UCC argued before Swain, who presides the Puerto Rican debt restructuring process, that GO bonds issued between 2012 and 2014 – two issuances under Luis Fortuño and one under Alejandro García Padilla administrations – exceeded Puerto Rico´s constitutional debt limit.

González said that she was surprised when she saw the document because the Board is interpreting a law (enacted in the 1950s), only for three issuances. She also claimed to establish the responsibility of individuals, firms and law firms that recommended and led the Legislative Assembly and the administrations to make such decisions.

González expressed mixed feelings about the request. On one hand, she said, she acknowledged that canceling $ 6 billion in government debt would represent an important relief for Puerto Rico, but on the other hand, she fears the effect it may have on pensioners since she understands they may affected by the cancellation of bonds.

For González, the court will have to decide on this, however, she fears whether this situation will after the return to financial markets or not since credibility may be affected by the cancellation of previous issuances. 

According to Board and the UCC, the government of Puerto Rico had already exceeded that constitutional debt limit since March 2012.

The Board and the UCC seek to cancel two issuances made by the government of Luis Fortuño in 2012: one for $ 2,318 billion and another for $ 417 million. They have also agreed to request Judge Swain to cancel the $ 3,5 billion debt issued in 2014 during the government of Alejandro García Padilla.

Judge Swain scheduled a hearing for January 30 to review the Board's request. Puerto Rico´s GO debt reaches about$ 13 billion, but if the debt guaranteed by the central government is added, then it rises to about $ 16 billion.

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