Puerto Rico Pension, Highway Agency Join Govt in Bankruptcy

Austerity measures aimed at tackling the island's crippling debt crisis are increasingly taking a toll on Puerto Ricans.
Puerto Rico's federal oversight board has sought bankruptcy protection for the island's highway authority and largest public pension, making them the latest entities to turn to a court to work out debt.

The board filed the cases late on Sunday in U.S. District Court in San Juan, under a process akin to U.S. bankruptcy, known as Title III, that was created by the U.S Congress last year under the controversial law known as PROMESA.

Puerto Rico's central government, as well as its COFINA sales tax authority, are already in Title III bankruptcy, and a lawyer for the oversight board said last week other agencies would follow "soon."

The latest filings could set the stage for an unconventional fight between retirees and the very lenders whose money was supposed to sustain them, an indication of just how complex PuertoRico's debt structure is.

The island has nearly US$73 billion in public debt, a 45 percent poverty rate and unemployment more than twice the U.S. average.

Its pensions owe another US$50 billion to retirees who may face benefit cuts as part of PuertoRico's restructuring.

Highway authority HTA owes some US$6 billion in debt — including more than US$46 million to PuertoRico's power utility, PREPA, according to the court filing.