Monday, May 22, 2017

Now Puerto Rico Employee Retirement System Files for Bankruptcy

Things keep getting worse on what should be an island paradise. (Thank you, crony government planners.)

The federal board overseeing Puerto Rico's financial restructuring is enlarging the U.S. territory's court-supervised bankruptcy, placing its pension system and its transportation agency under court protection.

The Employees Retirement System and the Highways and Transportation Authority entered a debt-restructuring process that amounts to municipal bankruptcy today in the federal court in San Juan.

The pension system's bankruptcy has implications for hundreds of thousands of government retirees and pensioners who are up against bondholders in the renegotiation of Puerto Rico's debts.

Estimates vary as to the size of the gap between what the pension fund's assets and its promises to its beneficiaries, but Puerto Rico projects the unfunded liability at roughly $45 billion, the product of years of deficient funding by government employers. ERS also owes $3 billion to bondholders. The highway agency owes roughly $6.3 billion in debt, including $1.8 billion to Puerto Rico's insolvent industrial development bank, according to the oversight board.

Puerto Rico and its agencies owe roughly $73 billion in bond debt, dwarfing the roughly $9 billion owed by the city of Detroit when it entered what was previously the largest municipal bankruptcy in 2013.

This is likely a prelude to financial problems for mainland US governments and pension funds. Most shaky are the states of Illinois, Connecticut, and California.



No comments:

Post a Comment